Actions of the Federal Reserve will have little if any impact on the money supply if banks are unwilling to make loans or borrowers are unwilling to borrow.

Question

Quizplus · Accepted Answer

The Federal Reserve influences the money supply primarily through open market operations, discount rates, and reserve requirements. However, if banks are unwilling to lend or borrowers are unwilling to borrow, these tools become less effective because the actual amount of money circulating in the economy does not increase as intended.

Actions of the Federal Reserve Will Have Little If Any