ECONOMICS, PLEASE I NEED HELP QUICK?

In America, the banks have the power to create money through interest. Inflation is the general rise in price of goods, which is caused by the devaluation of money (too much currency in the economy). In order to fix this the Fed can use 2 tools to control money (Monetary policies).

1) The Discount Rate- This is the rate of interest a bank borrows reserves from the Fed, if the Fed raises the interest, the banks make less loans, thus decreasing the amount of money created.

2) Required Reserve Ratio- This is the percentage of deposits banks must keep as legal reserve, it is the most powerful monetary policy, and the least commonly used. If the Fed increases the Required Reserve Ratio, banks will have less access to money, and will therefore make less loans, decreasing the amount of money created.

Hope this helps.

One tool the Federal reserve could use is lowering the supply of money in circulation. To do this, they would need to use U.S foreign exchange reserves to purchase U.S dollars from foreign countries. The Federal Reserve could then hold on to this money. By doing this, the Fed is essentially decreasing the available supply of U.S dollars. The supply curve of U.S dollars will shift to the left, increasing the exchange rate of the dollar.

There is only one way to increase/decrease inflation. That is to increase/decrease the rate of growth in the supply of money relative to the rate of growth in the economy. So the Fed could contract the supply of money by selling its bonds.

in case you basically provide them a fastened volume of money, no longer something differences. in case you provide them money for each unit they produce (or consume), the completed supply (or call for) curve will shift. So it rather is call for & supply shift. "volume demanded/presented" differences while the curve would not flow, yet as a replace equilibrium strikes to a distinctive element on a curve (it somewhat is stated as moving alongside the curve)

By creating massive unemployment you stop inflation . Of course you kill the economy too .