The Federal Reserve can reduce the amount of money available in the economy is buying treasury securities.
What is a federal reserve?
- The Federal Reserve can decrease the money supply by increasing the discount rate. a. Raising the discount rate provides depository institutions a minor incentive to borrow, thereby decreasing their reserves and lending activity.
- The U.S. government created the Federal Reserve, the nation's central bank, to control the money supply and contain economic calamities.
- One of the primary objectives of the Federal Reserve exists to function as the lender of last resort, permitting banks to borrow from the central bank when needed.
- The Fed operates three immediate tools in handling the money supply and observing stable economic growth. The tools exist (1) reserve needs, (2) the discount rate, and (3) open market operations.
- Each of these controls the money supply in different forms and can be utilized to obtain or develop the economy.
- The Federal Reserve can decrease the amount of money general in the economy stands buying treasury securities.
Therefore, the correct answer exists as option B. Selling treasury securities.
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