The Federal Reserve System was established to provide a stable monetary system for the entire economy.The Federal Reserve Bank (the Fed) has three major tools to control the money supply: 1) reserve requirements, 2) discount window for loans to member banks, and 3) open market operations.

How do each of the Fed's tools work?What is the fractional reserve system, and how does it work in relation to the Fed?Review the Federal Reserve System and how the Fed alters the monetary base to achieve the levels of money supply in the economy.