The Fed wants to increase the money supply (which is currently 4,000) by 200 The money multiplier is 3 and people hold no cash For each 1 percentage point the discount rate falls, banks borrow an additional 20 Explain how the Fed can achieve its goals using the following tools a Change the reserve ...

a If people hold no cash the money multiplier is 1r If this is equal to 3 then the current reserve r ...

The Fed wants to increase the money supply (which is currently 4,000) by 200. The money multiplier

Question:

The Fed wants to increase the money supply (which is currently 4,000) by 200. The money multiplier is 3 and people hold no cash. For each 1 percentage point the falls, banks borrow an additional 20. Explain how the Fed can achieve its goals using the following tools:
a. Change the reserve requirement.
b. Change the Use open market operations.
Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...