Respuesta :
The Fed would use open market operations to move the money supply to a higher point, typically MS4, to engage in expansionary policy.
What does Money suppply means?
The total amount of money in circulation within an economy at any given time is referred to as the "money supply." It includes money in bank accounts as well as cash and coins. The size of the money supply can influence the rate of inflation, economic growth, and currency exchange rates. Central banks control the money supply by creating or destroying money by purchasing and selling government bonds and other financial instruments.
What does Inflation mean?
Inflation is a term used in economics to describe an increase in the average price level of goods and services in an economy over time. It is expressed as a percentage increase each year. When the inflation rate is high, the general price level of goods and services rises, while the purchasing power of a currency falls.
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