By changing ________,the Federal Reserve can expand or shrink funds available to lend.

Question

Quizplus · Accepted Answer

The Federal Reserve primarily uses changes in interest rates to expand or shrink funds available to lend. Lowering interest rates makes borrowing cheaper and encourages borrowing and spending, thereby increasing the money supply. Raising interest rates has the opposite effect, reducing borrowing and spending, and decreasing the money supply. Changes in spending, fees, and taxes can also affect the money supply, but these are not primary tools used by the Federal Reserve.

By Changing ________,The Federal Reserve Can Expand or Shrink Funds