The Federal Reserve Bank (“the Fed”) is the central bank of the United States. One of its jobs is to manage the money supply. Sometimes it increases the money supply. Sometimes it decreases the money supply. Start your discussion by responding to these questions: Name at least one action that the Fed could take to reduce the money supply and raise interest rates. Given our current economy, would you recommend that the Fed reduce the money supply and raise interest rates, or expand the money supply and lower interest rates? Please explain. Be sure to respond to at least one of your classmates’ posts and discuss whether their response is similar to yours. Sherry Kinley Hi class, one action Feds can do to reduce the money supply and raise interest rates by lower the requirements to borrowing money it’s existing and/or potential clients. This process will give banks the opportunity to lend more money and increase it’s repayment interest rates. This surplus of money will entice borrowers to spend more in which will boost the economy. Given our current economy, I would recommend that the Fed expand the money supply and lower interest rates. Commercial banks will send more money into economic market by lowering federal interest rates that are charged to them. It increases the money supply because the banks can now invest it’s extra capital into a businesses through their loans or other investments they may have.
The Federal Reserve Bank (“the Fed”) is the central bank of the United States. O
Leave a reply