How does the Fed implement monetary policy to manage the economy?© BrainMass Inc. brainmass.com December 20, 2018, 9:52 am ad1c9bdddf
The Federal Reserve uses three main monetary policy tools. All are designed to change the money supply.
1. Open market transactions
The Fed can put money into the economy by buying bonds, or remove money from the economy by selling bonds.
2. Changing the required reserve rate
By decreasing the percentage of assets ...
This solution details the three main policy tools that the Federal Reserve uses to implement monetary policy and manage the economy.