Drag 6 Saved Help Save & EX The Federal Reserve tries to create a positive economic environment capable of sustaining low inflation, high levels of employment, a balance in international payments, and long-term economic growth using a variety of monetary tools. In the following activity, use the hints to categorize both the effects on money supply and economic activity by the monetary tools used to create each effect. The guardian of the American financial system is the Federal Reserve Board, or "the Fed," as it is commonly called, an independent agency of the federal government established in 1913 to regulate the nation's banking and financial industry. The Federal Reserve Board is the chief economic policy arm of the United States. Working with Congress and the president, the Fed tries to create a positive economic environment capable of sustaining low inflation, high levels of employment, a balance in international payments, and long-term economic growth. Read each statement when it appears and place the item in the correct box in the chart on the right Decrease-activity increases Buy increases supply Effect on money supply Effect on economic activity Government securities Relax-more consumption Restrict-decreasing activity Discount rate Lower-activity increases Raise-decrease supply Reserve requirements Prev 3 of 3 Board is the chief economic policy arm of the United States. Working with Congress and the president, the Fed tries to create a positive economic environment capable of sustaining low Inflation, high levels of employment, a balance in international payments, and long-term economic growth. Read each statement when it appears and place the item in the correct box in the chart on the right 16 Decrease-activity increases Buy-increases supply Effect on money supply Effect on economic activity Government securities Relax-more consumption Restrict-decreasing activity Discount rate Lower-activity increases Raise-decrease supply Reserve requirements Increase-supply declines Sell-slows economic activity Credit controls Reset