The Federal Reserves establishes the interest rate charged on funds it loans to banks and other financial institutions. A lower interest the incentive to borrow funds from the Federal Reserve, thereby rate which causes the money supply to the quantity of reserves in the banking system, When the Federal Reserve loans less funds to banks and another financial institutions, the quantity of reserves in the banking and the money supply system 12 80 D #3 3 W S $ 5 St 4 % 85 96 Michy A Grade It Now Save & Continue Continue without saving DII DD FR & 7 8 9 E R T Y U " 10 0 O P D F G H J K L < > X C V B N M