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:

Channel Functions

Activities that enable the transfer of goods from the producer to the consumer, including physical distribution, financing, and information sharing.

Perishability

A characteristic of services indicating that they cannot be stored for future use and their value vanishes if not consumed within a particular period.

Service Capacity

The maximum output or amount of service that can be provided by a business in a given period.

Reference Pricing

A pricing strategy where the price of a product is determined relative to the price of other similar products or services in the market.