What Are the Three Tools That the Federal Reserve Uses

question 132

Essay

What are the three tools that the Federal Reserve uses to alter the money supply? Explain how each can be used to increase the money supply.

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Definitions:

Price Discriminate

The practice of charging different prices to different consumers for the same product or service, based on what the seller thinks the market can bear, rather than standard costs.

Monopolist

An entity with exclusive control over the supply of a particular good or service, setting prices without competition.

Pure Monopolist

A market structure where a single firm completely dominates the market, with no close substitutes for its product, allowing it to control prices.

Discriminating

The act of making a distinction or differentiating between items, people, or situations, often based on specific criteria.