when the federal reserve increases the money supply, at the previous equilibrium interest rate households and firms will now have



Answer :

Federal Reserve have more money than the money they want to hold.

The United States of America's central banking system is called the Federal Reserve System. With the passage of the Federal Reserve Act on December 23, 1913, it was established in response to the need for centralized control of the monetary system to prevent financial crises following a string of financial panics. To guarantee that the financial system supports a strong economy for American people, communities, and businesses, the Federal Reserve analyzes financial system risks and actively participates at home and abroad.

Each of the 12 regional reserve banks of the Federal Reserve System is owned by its member banks, who initially provided the capital to keep them operating, in accordance with the Federal Reserve Act of 1913.

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