Change the reserve requirement-change the discount rate

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Reference no: EM13839541

The Fed wants to increase the money supply (which is currently 4,000) by 200. The money multiplier is 3. For each 1 percentage point the discount rate falls, banks borrow an additional 20. Explain how the Fed can achieve its goals using the following tools: (LO30-3)

a. Change the reserve requirement.

b. Change the discount rate.

c. Use open market operations.

Reference no: EM13839541

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