Lonely planet best destinations 2015 for The Federal Reserve changes the money supply via open-market operations which are the buying and selling of previously issued government bonds. The market actually operates in New York City. An open-market purchase of government bonds from the public (i.e. the nonfinancials and private banks) injects new money into the economic system and will therefore increase the money supply.
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Lonely Planet Best Destinations 2015
If the opportunity cost of money is the interest rate, then an increase in the money supply tends to push down the interest rate.
An open market sale of government bonds will involve money being removed from the system as nonfinancials and private banks effectively pay the Federal Reserve for these assets. Lonely planet best destinations 2015 2016.