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Three tools of monetary policy

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1. Explain how each of the three tools of monetary policy may be used by the Fed to expand and to contract the money supply. Good internet sources:
[FRB on Monetary policy and monetary policy instruments:

"Monetary policy is made by the Federal Open Market Committee, which consists of the Board of Governors of the Federal Reserve System and the Reserve Bank presidents."
http://www.federalreserve.gov/policy.htm ]

2. By use of monetary policy how would your increase employment in the economy and GDP? List and define the problems and complications of monetary policy.

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1. Explain how each of the three tools of monetary policy may be used by the Fed to expand and to contract the money supply. Good internet sources:
[FRB on Monetary policy and monetary policy instruments:
"Monetary policy is made by the Federal Open Market Committee, which consists of the Board of Governors of the Federal Reserve System and the Reserve Bank presidents."
http://www.federalreserve.gov/policy.htm ]

Monetary policy is a policy regulated by country's central bank. There are three tools of monetary policy: open market operations, changes in reserve requirements, and changes in the discount rate. Fed, central bank of US can expand the money supply by:
? Reducing the discount rate
? Reduction in reserves requirements
? Purchasing the Bonds
Fed, central bank of US can ...

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Response explains the use of three tools of monetary policy

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Macroeconomics

1. Describe the three tools of monetary policy.

2. Find an article that shows a change in the US monetary policy.

3. State the objective of this monetary policy.

4. Discuss the expected outcomes of that policy.

5. Summarize how this monetary policy has affected (is affecting) the economy through change in the money supply.

6. Explain how this monetary policy affects the money supply, interest rate, investment spending, aggregate demand, and equilibrium level of GDP.

7. Quote a sentence in your article that specifically refers to the monetary policy and provides evidence of its application that you indicated in question (6).

8. State the name of the article and place the link into your answer.

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