WGU C211 Global Econ Study Guide- Competency 4 Exam Questions and Answers 100% Pass

WGU C211 Global Econ Study Guide- Competency 4 Exam Questions and Answers 100% Pass Federal reserve tools - Answer- open market operations, discount rate, reserve requirement open market operations - Answer- Buying & selling government securities to change the supply of money Fed buys bonds - Answer- -decrease in the federal funds rate -increase in money supply Fed sells bonds - Answer- -increase in the federal funds rate -decrease in money supply discount rate - Answer- rate the Federal Reserve charges for loans to commercial banks FED reduces discount rate - Answer- The Fed can alter the money supply by changing the discount rate. Conversely, a lower discount rate encourages banks to borrow from the Fed, increasing the quantity of reserves and the money supply. Fed increases discount rate - Answer- The Fed can alter the money supply by changing the discount rate. A higher discount rate discourages banks from borrowing reserves from the Fed. Thus, an increase in the discount rate reduces the quantity of reserves in the banking system, which in turn reduces the money supply