1. Describe three ways in which the Federal Reserve can change the money supply.
The Federal Reserve System "The Fed" controls the money supply in the United States by controlling the amount of loans made by commercial banks. New loans are usually in the form of increased checking account balances, and since checkable deposits are part of the money supply, the money supply increases when new loans are made and decreases when they decrease.
The funds that banks can potentially loan are those in their excess reserves, so to control loans, checkable deposits, and ultimately the money supply, the Fed influences the excess reserves that banks have available to them. The three ways that it does this are: 1– through changing the required reserve ratio, 2– allowing banks to borrow from it (the Fed) at the discount rate, and 3– conducting open market operations (buying and selling bonds). (www.dushkin.com)
2. If the Federal Reserve is going to adjust all of these tools during......

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Title: How Does The Federal Reserve Control The Money Supply?
Approximate Word Count: 326
Approximate Pages: 2 (250 words per double-spaced page)

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