raising of interest rates
It would NOT shrink the money supply, it would just cause the supply of money to grow at a slower pace. So it would decrease the rate of growth of the money supply.
a decrease in the money supply
An increase in the money supply shifts the money supply curve to the right. If you look on your graph, you will see that an increase in money supply will cause the interest rate to decrease. Here's why: Fed increases money supply-->excess supply of money at the current interest rate -->people buy bonds to get rid of their excess money-->increase in the prices of bonds --> decrease in the interest rate.
Use a monetary policy to decrease the money supply.
It means to decrease, or lower, the money supply. EXAMPLE: The feds sold treasury bonds and bills in order to contract (decrease) money supply.
It would NOT shrink the money supply, it would just cause the supply of money to grow at a slower pace. So it would decrease the rate of growth of the money supply.
a decrease in the money supply
An increase in the money supply shifts the money supply curve to the right. If you look on your graph, you will see that an increase in money supply will cause the interest rate to decrease. Here's why: Fed increases money supply-->excess supply of money at the current interest rate -->people buy bonds to get rid of their excess money-->increase in the prices of bonds --> decrease in the interest rate.
That would be decrease
Use a monetary policy to decrease the money supply.
It means to decrease, or lower, the money supply. EXAMPLE: The feds sold treasury bonds and bills in order to contract (decrease) money supply.
Deflation
An decrease in the required reserve ratio leads to an increase in the money supply
An decrease in the required reserve ratio leads to an increase in the money supply
when money supply is increased, interest rates decrease
Increase or decrease the money supply
the prime rate