ECO 100 DISCUSSION FEDERAL RESERVE BANK

Exploring the Role of the Federal Reserve Bank

The Federal Reserve Bank (the “Fed”) is the central bank of the United States. One of its jobs is to manage the money supply. Sometimes it increases the money supply. Sometimes it decreases the money supply.

Reply to these questions in your post:

• Name at least one action that the Fed could take to reduce the money supply and raise interest rates.
• Given our current economy, would you recommend that the Fed reduce the money supply and raise interest rates, or expand the money supply and lower interest rates? Please explain.