Dear OTA: Need help on the following economic questions.
? Please describe how the Federal Reserve can affect the money supply and interest rates.
? Identify and describe the effects of a change in money supply on the interest rate.
? Please describe the money multiplier and the money creation process.
? Please describe the likely change in equilibrium output and price levels resulting from a change in interest rates.
Specifically, explain the different tools the Fed can use to change the money supply and interest rates, how interest rates and the money supply are related, and how changing interest rates will affect investment spending, equilibrium output, and prices. Also, could do a brief discussion of the money multiplier and how it relates to the Fed's activities
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This job explains the different tools the Fed can use to change the money supply and interest rates.
Potential Money Supply Increase And Process of Creation
Assume the banking system is in reserve equilibrium. The Fed conducts an open market purchase of Treasury securities in the amount of $1 billion. The reserve requirement against deposits is 10%. Identify the potential amount of the money supply increase as a consequence of the Fed's action and describe fully how money is created by the banking system subsequent to the Fed's open market purchase of Treasury securities in the amount of $1 billion.View Full Posting Details