Question

The Federal Reserve increases the money supply when it is trying to encourage the economy to
.

Consumers are more willing to spend using credit when the money supply is higher because interest rates are
.

One major positive effect of increasing the money supply is
in the unemployment rate.

Answer 1

Answer:

The Federal Reserve increases the money supply when it is trying to encourage the economy to

✔ grow

.

Consumers are more willing to spend using credit when the money supply is higher because interest rates are

✔ lower

.

One major positive effect of increasing the money supply is

✔ a decrease

in the unemployment rate.

Explanation:

Edge 2021

Answer 2

Increased money supply leads to several things. This is why:

• The Fed increases money supply to grow the economy.
• Customers use credit when money supply is high because rates are lower.
• Increasing money supply decreases the unemployment rate.

When the money supply is raised, it generally leads to the economy growing because people will have more money to spend.

As a result of the amount of money increases, loans will be cheaper to get which would encourage people to get loans knowing that they will only pay lower interest rates.

With more people spending, companies will have to produce more to satisfy demand and they will need to employ more people to do this. The unemployment rate will therefore fall.

In conclusion, increasing money supply benefits the economy.

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