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The Federal Reserve Board can affect the economy by increasing or decreasing the money supply.
"Explain how different monetary policies affect the money supply in the economy?"
The total supply of money in circulation in a given country's economy at a given time.
Inflation
When it buy bonds- that money goes into the economy hence increasing the money supply
The Federal Reserve Board can affect the economy by increasing or decreasing the money supply.
"Explain how different monetary policies affect the money supply in the economy?"
The total supply of money in circulation in a given country's economy at a given time.
Inflation
In an economy, the quantity of money is measured by the Money Supply. This is the amount of money available in an economy in a specific period of time.
When it buy bonds- that money goes into the economy hence increasing the money supply
all the money available in an economy
all the money available in an economy
all the money available in an economy
When the interest rates are high, people would prefer to save than holding money. That means money supply in the economy is decreased. Whereas when the interest rates are low people prefer to hold money and spend, means increased money supply in the economy.
The national bank controlled the money supply
Money supply determines the value of money i.e. if there are a lot of money in an economy, the value decreases and the other way around. Therefore, money supply essential decides the price of a good (if the money is worth less, the prices go up ...etc...) Hence, according to monetarists, money supply is the key ingredient of inflation (and deflation)