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atroni [7]
2 years ago
5

The banking system and the government can affect the nation's money supply by taking certain actions. Which effect results from

each action?
History
2 answers:
rodikova [14]2 years ago
5 0

Answer:

Hopefully this is somewhat right. Please correct me if not.

Explanation:

Congress Lowers Tax Rates: People spend more, so the economy grows.

Congress Raises Tax Rates: People spend less, so the economy slows.

The Federal Reserve lowers interest rates: People find it harder to borrow and spend.

The Federal Reserve raises interest rates: People find it easier to borrow and spend.

I did a couple searches, and I interpret "Interest" as bank interest like savings. If taxes are lower, people have more disposable income to spend, so they're able to spend more. If taxes are higher, the opposite happens. With my understanding of the question, if the federal reserve lowers interest rates, they're unable to gain money off of what they borrow and spend as the rate is lower.

If interest is instead how much money you have to pay from borrowing, then switch the two answers. I am not quite sure as I am currently taking the PLATO Edmentum course myself. Hopefully this helps a little bit and please correct me if I'm wrong or inaccurate in any way, this is my first brainly answer after having used it for a good week or so.

Scorpion4ik [409]2 years ago
4 0
By lowering the reserve requirements, banks are able to loan more money, which increases the overall supply of money in the economy.
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