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How might the supply of money, the demand for money, and/or the interest rate be affected by...?
* The Fed buys securities in the open market.
* The reserve requirement is increase
* Consumers decide to save and reduce their spending on consumer goods.
1 Answer
- 1 decade agoFavorite Answer
1)money supply increases. since the govt buys the securities and in return pays to the traders.(interest rates increase)
2) money supply reduces as the banks are supposed to keep more money with them in order to meet both expected n unexpected requirements.
3) the demand of money for transactions purpose has reduced here .thus, to make them save less govt may reduce the interest rates on savings as d incentive to save is less now.
hope this helps!!!!! :)
