The Fed began paying banks interest on excess reserves in late 2008. What did it hope to accomplish by establishing this policy strategy? to encourage banks to borrow funds directly from the Fed instead of obtaining funds in the federal funds market.
Assuming that the Fed judges inflation to be the most significant problem in the economy and that it wishes to employ all three of its policy instruments. It sells bonds in the open market, increases the discount rate, and increases the reserve ratio.
The Fed can increase the money supply through an open market purchase of Treasury securities. The Fed can increase the money supply through an open market sale of Treasury securities. The Fed can decrease the money supply through an open market purchase of Treasury securities. The Fed can lower taxes.
The Fed dictates the amount of money that banks must keep in their vaults. Nice work! You just studied 23 terms! Now up your study game with Learn mode. Which of the following is an example of deflation? Someone owes more on a house than it is worth. Which of the following is NOT a way that the Fed uses the open market to control the money supply?