How does the Federal Reserve bank attempt to influence money supply?

Answer 1

With so much money changing hands electronically now, all they have to do is say "Make it so". They actually didn't need the bailout money either, it could have been done without increasing the debt of the government, and it's interesting to note that the BANKS have gotten that money and are hanging on to it.

Answer 2

By cutting off the money supply, the Fed responds by taking more money into its base and stopping the printing of money. In addition to these strategies, people are encouraged to start saving by increasing the return on bonds, CDs, and savings account rates. When people spend less and save more, the inflation in the country's currency can become stable once again, and prices will return to the most profitable and ideal rate, thus regulating the system.

open market operations: purchases and sales of U.S. Treasury and federal agency securities-the Federal Reserve's principal tool for implementing monetary policy. The Federal Reserve's objective for open market operations has varied over the years. During the 1980s, the focus gradually shifted toward attaining a specified level of the federal funds rate (the rate that banks charge each other for overnight loans of federal funds, which are the reserves held by banks at the Fed), a process that was largely complete by the end of the decade. Discount rate: interest rate charged to commercial banks and other depository institutions on loans they receive from their regional Federal Reserve Bank's lending facility--the discount window... reserve requirements: the amount of funds that a depository institution must hold in reserve against specified deposit liabilities

Answer 3

The Government has no control over the money supply, only the loanable funds market. The only way the government can effect the economy is to change its spending, or change taxes. The Federal Reserve (not apart of the government) controls the money supply. It can buy/sell treasuries, raise/lower discount rate, as well as the reserve requirement in banks.

Answer 4

The Federal Reserve uses three tools to control the money supply. They are:

1. Changes in the reserve requirements.
2. Changes in the discount rate.
3. Open market operations.

Answer 5

They buy bonds from investors, thereby putting more money into the supply.

They sell bonds to investors, thereby drawing money out of the supply

They can adjust the reserve requirements to change the money multiplier. This is a slowish process.

They adjust the overnight loan rate to make it cheaper or costlier to violate reserve requirements.

Answer 6

The federal reserve decides what interest rates will be. If they decide interest rates should be low (which they usually do when the economy is suffering), people will buy more and the economy will flourish. If they decide interest rates should be high (which they usually do when inflation is high), people will buy less and money is not as available as it was. The federal reserve also decides what the reserve rates will be. Reserve is how much money a bank must keep in the bank and not lend out to people. They can lower it and money will become more available to be lent by people and eventually spent on the economy. They can higher it and more money must remain in the bank, therefore not as much loans are being handed out and spent on the economy. As you can see, people rightfully claim that the Federal Reserve system's chairmen are the most powerful people in the country, besides the president.

While the above answer explains some of the Fed's job, it doesn't answer the question, the Fed can increase or decrease the money supply by conducting open market operations, in which they buy (increase money supply) bonds from the public, or sell (decrease money supply).

Answer 7

The federal reserve controls money supply by controlling what budgets do and don't get approved. They also decide who is allowed to receive extra money.

Answer 8

The primary way the Fed controls the supply of money is by:

Answer 9

By adjusting interest rates.