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Fully describe the method by which the Federal Reserve uses the banking system to create new money.

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This solution is comprised of a detailed explanation to describe the method by which the Federal Reserve uses the banking system to create new money.

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The federal reserve can change or manipulate the money supply in the economy by using the banking system through the change in the bank rate, the purchasing of government securities in the open market operations, and the change in the variable reserve ratio.

If the Federal Reserve is going to adjust all of these tools during ...

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