How does the federal reserve reduce the money supply in the economy? using monetary policy, the federal reserve increases to reduce the money supply in the economy.

The correct answer is: "Using monetary policy, the Federal Reserve increases the interest rate to reduce the money supply in the economy".

The interest rate is the price charged by financial institutions for borrowed funds. If such price increases, the amount of borrowed funds that investors are willing to demand decreases (inverse relationship of price and quantity demanded). Therefore, such adverse conditions, restrict the amount of money in circulation in the economy, the so-called money supply.

it brings together the military and civilian sectors of society to harness the total power of the nation. it is the mechanism that facilitates the successful prosecution of any conflict.it brings together the military and civilian sectors of society to harness the total power of the nation. it is the mechanism that facilitates the successful prosecution of any conflict.

for many centuries there were important factors which the economies of the muslim empires developed increasingly. they applied economic procedures in production, investment, finance, taxation and property. they used to tax certain goods (for example: harvest), they charged interest on money lent, they signed contracts with merchants; they relied on a common currency, and they used checks as well as promissory notes. with the money collected by means of taxation, the government provided the needy with an income. in addition, trading networks covered huge distances, so far regions started to have contact and exchange goods. this trade network covered areas of asia, africa and europe.