Federal Actions

1
Federal Actions
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Contract
(1) Open Market Operations
Sell securities in the open market
Buy securities in the open market
(Increase Reserves)
(Decrease Reserves)
Impact will be more limited if banks are holding
excess reserves.
2
Federal Actions
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Contract
(2) Discount Rate
Raise the discount rate discourage borrowing
Lower the discount rate induce borrowing
(Increase Reserves)
(Decrease Reserves)
Adjustments may be active or merely passive.
3
Federal Actions
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Contract
(3) Changes in Reserve Requirements
Lower reserve requirements
Raise reserve requirements
(Increase Reserves)
(Decrease Reserves)
4
Federal Actions
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Contract
(4) Moral Suasion
Request and warn
Request and warn