Explain How Each of the Following Changes the Money Supply

question 6

Essay

Explain how each of the following changes the money supply.
a.the Fed buys bonds
b.the Fed auctions credit
c.the Fed raises the discount rate
d.the Fed raises the reserve requirement

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Definitions:

Payment Of Money

A transaction where currency is transferred from one party to another as a means of fulfilling a financial obligation.

Tangible Real Property

Physical property, such as land or buildings, that has inherent value and exists in the material world.

Corn

A cereal plant that yields large kernels set in rows on a cob, widely grown for food, fodder, and biofuel.

Mortgage

A loan obtained for the purpose of purchasing property, where the property itself serves as collateral for the loan.