The Federal Reserve's tools to control the money supply include: open-market operations, the discount rate, and interest payments on reserves.

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?

Question

The Federal Reserve's tools to control the money supply include: open-market operations, the discount rate, and interest payments on reserves.

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?

Quizplus · Accepted Answer

The Answer of The Federal Reserve's tools to control the money supply include: open-market operations, the discount rate, and interest payments on reserves.

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?

The Federal Reserve's Tools to Control the Money Supply Include