Question 6 • FL-2106010-M/J Civics B
Answer:
The Federal Reserve regulates the money supply through monetary policy. For example, when it buys government securities, it adds money to the banking system and can encourage banks to lend more. When it sells securities, money is withdrawn from the banking system, which can reduce lending. The Fed also influences interest rates and bank reserves to affect how much people and businesses borrow and spend.