Question

How does the Federal Reserve control the money supply?

Answer 1

The Federal Reserve controls the money supply by:

• raising or lowering the discount rate.
• by raising or lowering the reserve requirement.
• by buying and selling government bonds and treasury bills.

What is Federal Reserve?

It should be noted that the Federal Reserve simply means the bank that oversees the economic affairs in a country.

Here, the Federal Reserve controls the money supply by raising or lowering the discount rate, raising or lowering the reserve requirement, and by buying and selling government bonds and treasury bills.

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