The Fed controls the money supply in the U.S.economy largely through its ability to influence bank reserves and the money creating power of commercial banks.

Question

Quizplus · Accepted Answer

The Fed has several tools it can use to influence the money supply, including adjusting the interest rates it charges banks, setting reserve requirements for banks, and conducting open market operations to buy or sell government securities. By influencing bank reserves and the ability of commercial banks to create new money through lending, the Fed has significant control over the money supply in the economy.

The Fed Controls the Money Supply in the U