the federal reserve

How does the Federeal Reserve control the amount of money in circulation?

By (1) setting the short term interest rate that banks must pay from loans from the Federal reserve and (2) setting the "reserve requirement" that banks must leave on deposit with the Federal Reserve to satisfy demand deposits. The restricts the ability of banks to open new checking accounts and issue new loans.

and one more, Open Market Operations, -- the buying and selling of government securities.

  1. 👍 0
  2. 👎 0
  3. 👁 102

Respond to this Question

First Name

Your Response

Similar Questions

  1. the fed

    Which best describes one of the ways in which the Federal Reserve has an impact on the national economy? 1. The Federal Reserve helps the economy by keeping inflation low in times of economic growth. 2. The Federal Reserve keeps

    asked by camii on May 31, 2017
  2. banks

    Describe how banks help to eliminate money. What kind of money are you talking about? Taking paper money out of circulation? Banks actually create money when they issue checking accounts for people and busineses they grant loans

    asked by Anonymous on December 12, 2006
  3. econ

    1. A bank has $120 million in total assets, which are composed of reserves, loans, and securities. Its only liabilities are $120 million in transactions deposits. The banks exactly satisfies its reserve requirement, and its total

    asked by boneesha on October 1, 2010
  4. Macroeconomics

    (Monetary Control) Suppose the money supply is currently $500 billion and the Fed wishes to increase it by $100 billion. a. Given a required reserve ration of 0.25, what should it do? b. If it decided to change the money supply by

    asked by Beth on June 2, 2015
  5. Economics

    Which of the following is true about the quantity of money in the U.S. economy? (A) It is equal to the amount of cash in circulation(B)It is much greater than the amount of cash in circulation(C)It is equal to the value of the

    asked by SYshk on November 5, 2007
  6. Macroeconomics

    Show the changes to the T-accounts for the Federal Reserve and for commercial banks when the Federal Reserve buys $50 million in U.S. Treasury bills. If the public holds a fixed amount of currency (so that all loans create an

    asked by Yzenetra Adams on March 4, 2010
  7. Ec3125

    Which of the following is true about the quantity of money in the U.S. economy? (A)It is equal to the amount of cash in circulation (B)It is much greater than the amount of cash in circulation (C)It is equal to the value of the

    asked by Sharp on November 5, 2007
  8. civics

    The Federal Reserve has a number of ways to influence the supply of money. The Federal Reserve can influence the interest rate that people pay on their loans, regardless of what bank they are using. How might the Fed adjust the

    asked by Nani on June 1, 2015
  9. Civics

    The Federal Reserve has a number of ways to influence the supply of money. The Federal Reserve can influence the interest rate that people pay on their loans, regardless of what bank they are using. How might the Fed adjust the

    asked by Carla on May 24, 2017
  10. civics banking

    The Federal Reserve has a number of ways to influence the supply of money. The Federal Reserve can influence the interest rate that people pay on their loans, regardless of what bank they are using. How might the Fed adjust the

    asked by Anonymous on May 26, 2017

More Similar Questions