Admin Table of Contents
- 1 How does the government affect the money supply?
- 2 Which of the following result from a change in the money supply brought about by an open market purchase?
- 3 How does the central bank of a country control the supply of money in an economy?
- 4 What is the role of the central bank in the Philippine economic Society?
How does the government affect the money supply?
The Fed can influence the money supply by modifying reserve requirements, which generally refers to the amount of funds banks must hold against deposits in bank accounts. By lowering the reserve requirements, banks are able to loan more money, which increases the overall supply of money in the economy.
Which of the following result from a change in the money supply brought about by an open market purchase?
Which of the following result from a change in the money supply brought about by an open market sale? Higher interest rates, decreased demand for investment. What are the two policy making bodies of the Federal Reserve? The Board of Governors and the Federal Open Market Committee.
How does the central bank of a country control the supply of money in an economy?
Influencing interest rates, printing money, and setting bank reserve requirements are all tools central banks use to control the money supply. Other tactics central banks use include open market operations and quantitative easing, which involve selling or buying up government bonds and securities.
What would be the results if a country produces too much money supply within the economy?
If there is too much money in the economy, however, people spend more money and demand increases at a faster rate than supply can match. Prices rise too quickly because of the shortage of products, and inflation results.
What action is most likely to result in an increase in the money supply?
In order to increase the money supply, the Federal Reserve buys bonds on the open market (and pays cash for these bonds). The cash that the Federal Reserve pays for these bonds expands the money supply, which has the net effect of decreasing interest rates.
What is the role of the central bank in the Philippine economic Society?
The central bank is the country’s keeper of official international reserves, which can be used to pay for imports of goods and services and foreign debts.