4. Problems and Applications Q2 If the Fed wants to increase the money supply, it can sell If the Fed wants to decrease the money supply, it can reduce bonds in open-market operations. the reserve requirement. When the Fed increases the interest rate it pays on reserves, the money supply will decrease When the FOMC increases its target for the federal funds rate, the money supply will increase If people decide to hold less currency after a rash of pickpocketing, the money supply decreases

Brief Principles of Macroeconomics (MindTap Course List)
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ISBN:9781337091985
Author:N. Gregory Mankiw
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Chapter11: The Monetary System
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4. Problems and Applications Q2
If the Fed wants to increase the money supply, it can sell bonds in open-market operations.
If the Fed wants to decrease the money supply, it can reduce the reserve requirement.
When the Fed increases the interest rate it pays on reserves, the money supply will decrease
When the FOMC increases its target for the federal funds rate, the money supply will increase
If people decide to hold less currency after a rash of pickpocketing, the money supply decreases
Transcribed Image Text:es Tips 5 Tips 4. Problems and Applications Q2 If the Fed wants to increase the money supply, it can sell bonds in open-market operations. If the Fed wants to decrease the money supply, it can reduce the reserve requirement. When the Fed increases the interest rate it pays on reserves, the money supply will decrease When the FOMC increases its target for the federal funds rate, the money supply will increase If people decide to hold less currency after a rash of pickpocketing, the money supply decreases
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