Describe the tools the Fed has in its toolbox.

Expert Solution

Main monetary tools the FED uses:
1. Managing Interest rate : It has the power to increase or decrease interest rates and hence decreasing or increasing money supply to the economy.
2. Open Market Operation: By purchasing or selling securities in open market operation FED can opt for expansionary or contractionary monetary policy.
3. Reserve Requirement : By increasing the reserve requirements for the bank the FED can reduce money supply and by reducing reserve requirement for banks it can increase money supply.

The monetary policy by decreasing money supply can reduce inflation or vice versa. The reduction in money supply reduces demand for funds. It can stimulate growth and employment by increasing money supply. This can be achieved by purchasing securities in OMO , or reducing interest rates and lowering reserve requirements.
Agency relationship is the case where certain agents or managers perform on behalf of the owners . The agents follow instructions by owners and act accordingly. They are controlled by the owners.

jeff jeffy answered 7 months ago

If the Fed wishes to stimulate the economy, what tools it has at its disposal? Discuss...

If the Fed wishes to stimulate the economy, what tools it has at its disposal? Discuss two of these tools and with the help of an AD-AS model, demonstrate the effect on output and price-level.

If the Fed wishes to stimulate the economy, what tools it has at its disposal? Discuss...

If the Fed wishes to stimulate the economy, what tools it has at its disposal? Discuss two of these tools and with the help of an AD-AS model, demonstrate the effect on output and price-level.

List and Explain the three tools the Fed has at its disposal to change the money...

List and Explain the three tools the Fed has at its disposal to change the money supply and therefore change interest rates.

The Fed has several tools they can use to exercise their monetary policies. Describe two ways...

The Fed has several tools they can use to exercise their monetary policies. Describe two ways the Fed can do to exercise a tight money policy! Describe the kind of economic situation in which such a tight money policy would be appropriate for the economy! Explain why!

Describe the monetary policy tools available to the Fed and how they can be used to...

Describe the monetary policy tools available to the Fed and how they can be used to decrease the money supply

Describe the 4 main tools of monetary policy that the Fed uses. Describe the Fed’s main...

Describe the 4 main tools of monetary policy that the Fed uses. Describe the Fed’s main goals (in terms of monetary policy) Explain and show how the money market (supply and demand for money) is used to find the equilibrium interest rate and how it is affected by changes in the money supply. Show the diagram and explain the slope of money demand and illustrate what happens when the Fed increases or decreases the money supply.

- Describe the monetary policy tools the Fed can use to affect the monetary base. -...

- Describe the monetary policy tools the Fed can use to affect the monetary base. - Compare and contrast expansionary and contractionary monetary policies.

2.) What are the Tools of The FED that The FED uses? What is (define) The...

2.) What are the Tools of The FED that The FED uses? What is (define) The Discounted Rate? What is the purpose of The FED's Discounted rate?

What tools can the FED use to increase or decrease the money supply. Describe it full....

What tools can the FED use to increase or decrease the money supply. Describe it full. What effect does each tool have on GDP inflation and employment. For example if the Fed increases interest rates what might be the impact of that action on GDP, Inflation and Employment?

Explain the 3 tools of the fed in its attempt to carry out monetary policy decisions

Question

Describe the tools the Fed has in its toolbox.

Solutions

Expert Solution

Related Solutions

If the Fed wishes to stimulate the economy, what tools it has at its disposal? Discuss...

If the Fed wishes to stimulate the economy, what tools it has at its disposal? Discuss...

List and Explain the three tools the Fed has at its disposal to change the money...

The Fed has several tools they can use to exercise their monetary policies. Describe two ways...

Describe the monetary policy tools available to the Fed and how they can be used to...

Describe the 4 main tools of monetary policy that the Fed uses. Describe the Fed’s main...

- Describe the monetary policy tools the Fed can use to affect the monetary base. -...

2.) What are the Tools of The FED that The FED uses? What is (define) The...

What tools can the FED use to increase or decrease the money supply. Describe it full....

Explain the 3 tools of the fed in its attempt to carry out monetary policy decisions