Explain how each of the following changes the money supply. Be specific and deta

Question

Explain how each of the following changes the money supply. Be specific and detailed.

27 a. The FED buys bonds

27 b. The FED raises the discount rate

27 c. The FED raises the reserve requirement

Explanation / Answer

PLEASE , PLEASE DO RATE THE ANSWERS 27 a. buying bonds => flowing money to the investment .so liquidity in market increases 27 b. raises discount rate ==> more people are willing to invest their money to get higher interest rates ( so liquidity in market increases) 27 c. raises the reserve requirement ==> more people are not willing to invest (so liquidity in market decreases)

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