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[4] The FED uses 3 instruments to determine the Money Supply (MS) when conducting Money Policy (which is a stabilization Aggregate Demand side policy). Give

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[4] The FED uses 3 instruments to determine the Money Supply (MS) when conducting Money Policy (which is a stabilization Aggregate Demand side policy). Give the chain of influences or connections starting from an "increase in (or buying of) the instrument on toward "unemployment" and "inflation" for two of the following instruments of Money Policy: 1. Required Reserves (The FED determines the reserve ratio (rr) or the portion of bank deposits that must be kept in the bank vault and that can't be lent out as loans) 2. Discount Rate (The FED determines the interest rate (called the Discount rate) at which banks can borrow from the FED if they don't have the portion of cash they should have in their vaults at any one point in time) 3. Open Market Operations (The FED can buy and sell bonds in the Bond Market (called the Open Market) or in other words "put money in the hands of the public" or take money "out of the hands of the public" through an open market action.)

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