<p>Okay, so there's a macroeconomics question I'm clueless about, and I was wondering if you guys could help me, so here it is:</p>
<p>"Explain how the Fed could increase the level of bank reserves in the economy while leaving the money supply unchanged."</p>
<p>I know that the Fed could raise the reserve requirements, but that would lower the money supply...anyone?? Help!</p>
<p><strong><em>bump</em></strong></p>
<p>maybe they could work it through raising discount rates. If the fed charges higher discount rates to commercial banks, then these banks will probably increase their reserves to avoid having to go for an emergency reserve loan. The bank will simply increase reserves by lending out less money, but not necessarily taking money off the streets, so I guess MS would remain constant...maybe there's a better answer but I just don't feel like thinking econ today, I have my mock on friday so I'll study then haha.</p>
<p>they could increase the federal discount rate but i think that would also decrease the money supply</p>
<p>haha you posted the same time i did megaman</p>
<p>They could increase the discount rate and print more money in an attempt to have inflation + deflation at the same time?</p>
<p>why did you post two threads on the same topic, I just saw the same one in the cafe section,....you have officially lost all my respect and/or econ help</p>
<p>First off, thank you everyone for your help - I appreciate it and I think I'm just going to say that the Fed can raise the reserve requirements (which lowers money supply) and then buy bonds to the extent that it increases the money supply by the same amount by which the raised requirements lowered it - don't know for sure if it's correct, but it seems to make sense to me - thanks to ADad for explaining it to me! megaman, I posted multiple threads so that more people would see the thread (since people can't be in more than one section simultaneously) so that I would get responses more quickly (which is a priority since my assignment's due tonight) - is that not allowed on CC?</p>
<p>its no that its not allowed, its just really annoying to see the same thread over and over ( high schoo, cafe, parents cafe )...bnut yeah whatever, g'luck with your assignment</p>