The Federal Reserve Has Three Tools to Control the Money

question 78

Essay

The Federal Reserve has three tools to control the money supply: open-market operations, the discount rate, and reserve requirements.
a. How should each instrument be changed if the Fed wishes to decrease the money supply?
b. Will the change affect the monetary base and/or the money multiplier?

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Definitions:

Criteria

Standards or principles by which something is judged or decided.

2 + 2 = 4 Approach

Logical argumentation approach that convinces readers of your point of view by demonstrating how everything “adds up”.

Organizational Strategy

A comprehensive plan outlining how a company will achieve its goals and objectives, considering its resources, market position, and competition.

Logical Argument

A reasoned, structured series of statements intended to establish a position or persuade an audience.