Question

Is the US Dollar tied to a silver or gold reserve system? Look up some historical timeline related to this matter.  How does the Fed decide whether to use expansionary or contractionary monetary policy? Write up two reasons.  In your opinion, how does the Fed decide how much is enough in terms of money supply and interest rates? Write up two reasons.

Answer 1

that since 1971, U.S. citizens have been able to utilize Feeleral reserre Hotes as the only form of money for the first time had no carency with any gold or silver backing. This is where you get saying that visi dollars are backed by the fell baith and creceit' of u.s. government. An expansionary monetary policy is foruled by lowering the reseme requirements for banks cowich on expanding, or increasing the money supply in an economy, on the other hand contractionary monetung Bodily is focused on decreasing the money suppl in the economy. A centercu bani such as the federal resere to slow down overheated economic growth, to constrict spending in an economy that is seen to be accelerating in an economy too quietly to curb intration when it is rising too fast. when fed increales the money supply, the policy is called expansimary when fed decreased the money supply under policy econorry expands and output incredes, under contractionary output decrease. The fed can increase the money supply allows them to lend more mov loney. also alter short-term interest rates by lowering cor raising) the discount The fed can CS

2 cues short-term loans rate that banks poy on from the feel. The Fed changes the money supply by adjusting ree target the target fed fund rate. the fed monetary tools to encourage banki toreach its target rate. A larger money supply lowers market interest rates. making it less expensive for consumers to borrow, conversely smaller money supplies tends to raise market interest rates, making pricier for consumers out loan. it to take ICS Scanned with CarScanner