Simply stated

Simply stated - Simplystated, ,.Whenthe...

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Simply stated, monetary policy is carried out by the Fed to change the money supply.  When the Fed increases the money supply, the policy is called expansionary. When the  Fed decreases the money supply, the policy is called contractionary. These policies, like  fiscal policy, can be used to control the economy. Under expansionary monetary policy  the economy expands and output increases. Under contractionary monetary policy the  economy shrinks and output decreases. Let's investigate how the Fed affects the money  supply.  There are three basic ways that the Fed can affect the money supply. The first is  through open market operations. The second is by changing the reserve requirement.  The third is through changing the federal funds interest rate. Each of these actions in  some way affects the total amount of currency or deposits available to the public. 
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This note was uploaded on 12/13/2011 for the course ECO 1310 taught by Professor Staff during the Fall '10 term at Texas State.

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