posted by anita on .
Descibe three ways in which federal reserve can change the money supply.
If the federal rserve is going to adjust all of these tools during the economu that is gowing quickly. what changes would they make? if they make changes during econonmic recession, what changes. what changes if any to the current condition of these tools would you make
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I am trying to pick this all on paper in the first part of the question three ways in which the federal reserve can change the money supply
This information is copied from the site linked below.
"The Federal Reserve could continue to raise target interest rates."
"The Federal Reserve has two other tools. One is called the discount window. This involves three special interest rates that the Fed really does control. Banks can borrow at these rates for short periods. The program serves large or small banks as well as those with seasonal needs, like agricultural banks.
"Finally, the central bank can change the amount of money that banks are required to keep with the Federal Reserve itself. Increasing the reserves reduces the money supply, since it leaves banks with less money to lend."
thanks this really helps me.
What changes you think that the federal reserve would make in a growing econonmy. what changes if any benefits/drawback of this strategy.
I suggest you print the information from the above site and study it carefully, highlighting the parts that would seem to answer this question.