7. The monetary base is controlled by the Federal Reserve, the central bank of the United States....

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7. The monetary base is controlled by the Federal Reserve, the central bank of the United States. The Fed regulates banks and sets reserve requirements. To meet those requirements, banks borrow and lend reserves in the federal funds market at the federal funds rate.

SUMMARY Through the discount window facility, banks can borrow from the Fed at the discount rate.

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Essentials Of Economics

ISBN: 9781429218290

2nd Edition

Authors: Paul Krugman, Robin Wells, Kathryn Graddy

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