3. How the Fed influences the money supply Which of the following are ways that the Federal Reserve influences the U.S. economy through its monetary policies? Check all that apply. Using open-market operations to buy securities, the Fed can increase the money supply, thereby increasing interest rates, which wc cause security prices to decrease. Using open-market operations to buy securities, the Fed can increase the money supply, thereby decreasing interest rates and subsequently increasing the rate of inflation. The Fed can increase the Fed funds rate in an attempt to balance out inflationary pressure. Using open-market operations to sell securities, the Fed can increase the money supply, thereby increasing interest rates and subsequently reducing the rate of inflation. The following graphs represent (1) The Money Market and (2) The Aggregate Supply and Aggregate Demand within the U.S. economy. The demand curve shows the relationship between the quantity of money demanded and interest rates, and it's downward sloping because this is an inverse relationship. As interest rates increase, people would prefer to invest their financial assets, decreasing the quantity of money demanded. As which gives it the vertical shape. services. It is downward sloping because this is an inverse relationship. As the price level increases, the amount of goods and services demanded decrease. As the price level decreases, the amount of goods and services demanded will increase. The components that make real shows the relationship between the price level and the total amount of output firms will sell. It is upward sloping because this is a positive relationship. As the price level increases, the amount of goods and services sold will increase. As the price level decreases, the amount of goods and services sold will decrease. Use the graph to show what happens in the given scenario and to help answer the questions that follow. (Note: You will not be graded on any changes you make to the graph.) Suppose the FOMC's policy directive instructs the Trading Desk at the New York Fed to decrease the federal funds rate because the U.S. economy is experiencing a recession, and the FOMC wants to stimulate spending in the economy. If the FOMC wants to decrease the Fed funds rate, then the Trading Desk traders will a shift of the money supply curve to the , and so there will be a(n) in interest rates. As a result, consumers will purchase save , and businesses will invest Consequently, the aggregate demand curve will shift to the right, which shows that the economy has been successfully stimulated. 3. How the Fed influences the money supply Which of the following are ways that the Federal Reserve influences the U.S. economy through its monetary policies? Check all that apply. Using open-market operations to buy securities, the Fed can increase the money supply, thereby increasing interest rates, which wc cause security prices to decrease. Using open-market operations to buy securities, the Fed can increase the money supply, thereby decreasing interest rates and subsequently increasing the rate of inflation. The Fed can increase the Fed funds rate in an attempt to balance out inflationary pressure. Using open-market operations to sell securities, the Fed can increase the money supply, thereby increasing interest rates and subsequently reducing the rate of inflation. The following graphs represent (1) The Money Market and (2) The Aggregate Supply and Aggregate Demand within the U.S. economy. The demand curve shows the relationship between the quantity of money demanded and interest rates, and it's downward sloping because this is an inverse relationship. As interest rates increase, people would prefer to invest their financial assets, decreasing the quantity of money demanded. As which gives it the vertical shape. services. It is downward sloping because this is an inverse relationship. As the price level increases, the amount of goods and services demanded decrease. As the price level decreases, the amount of goods and services demanded will increase. The components that make real shows the relationship between the price level and the total amount of output firms will sell. It is upward sloping because this is a positive relationship. As the price level increases, the amount of goods and services sold will increase. As the price level decreases, the amount of goods and services sold will decrease. Use the graph to show what happens in the given scenario and to help answer the questions that follow. (Note: You will not be graded on any changes you make to the graph.) Suppose the FOMC's policy directive instructs the Trading Desk at the New York Fed to decrease the federal funds rate because the U.S. economy is experiencing a recession, and the FOMC wants to stimulate spending in the economy. If the FOMC wants to decrease the Fed funds rate, then the Trading Desk traders will a shift of the money supply curve to the , and so there will be a(n) in interest rates. As a result, consumers will purchase save , and businesses will invest Consequently, the aggregate demand curve will shift to the right, which shows that the economy has been successfully stimulated