Why is it more correct to say that the Fed (the central bank) controls the monetary...
Why is it more correct to say that the Fed (the central bank) controls the monetary base than to say it controls the amount of reserves?
Homework Answers
- The Fed or the federal reserve is the central bank of a country whose main function is to control a country's monetary base.
- It regulates the money supply in the economy and manages various financial and depository institutions of a nation.
- It is more correct to say that Fed control's the monetary base rather to say it control's the amount of reserves.
- This is because, Fed is responsible for increasing and decreasing the money supply in the economy by using various monetary tools through buying and selling of government securities.
- Reserves are created as a result of these action's of Fed. Hence we can say that Fed control's the monetary base than to say it control's the amount of reserves.
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Why is it more correct to say that the Fed (the central bank)
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