There are three basic ways that the Fed can affect the money supply

There are three basic ways that the Fed can affect the money supply

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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 the se actions in  some way affects the total amount of currency or deposits available to the public.  Open market operations are a form of monetary policy, meaning that the Fed directly  affects the money supply. Open market operations are the sale and purchase of  government bonds issued and regulated by the Fed. When the Fed sells government  bon ds, the public exchanges currency for bonds, thus resulting in a shrinking of the  money supply. When the Fed purchases government bonds, the Fed exchanges  currency for bonds, thus resulting in an increase in the money supply. Open market  operations are the most common tool that the Fed uses to affect the money supply. In 
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There are three basic ways that the Fed can affect the money supply

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