Question #1

A) List the tools used by the Federal Reserve to expand and contract the money supply and clearly explain how they work.

B) Evaluate the effectiveness and efficiency of each tool and explain which are used the most often and why.

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Kristelle BalandoLv10

29 Sep 2019

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Step 3: review what open market oprations are and how they can affect the money supply. Why does the Federal Reserve rely on this monetary policy tool to change the money supply. 20 points

Why does the Federal Reserve expand and contract the money supply? What are the four ways the Federal Reserve accomplish this task? How do each of the methods accomplish the intentions of the Fed? Which method(s) is most important/desirable? Which method is least preferred? Why?

1. Explain completely how each of the following tools of monetary policy is used to increase bank reserves and the money supply.

a. Required reserve ratio.

b. Federal reserve discount rate relative to the federal funds rate.

c. Open market operations.

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Question #1

A) List the tools used by the Federal Reserve to expand and contract the money supply and clearly explain how they work.

B) Evaluate the effectiveness and efficiency of each tool and explain which are used the most often and why.

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Question #1 A) List the tools used by the Federal Reserve to expand and contract the money supply and clearly explain how they work. B) Evaluate the effectiveness and efficiency of each tool and explain which are used the most often and why.

Unlock all answers

Related textbook solutions

Principles of Economics

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Question #1

A) List the tools used by the Federal Reserve to expand and contract the money supply and clearly explain how they work.

B) Evaluate the effectiveness and efficiency of each tool and explain which are used the most often and why.