1. Institution Affiliation: Date:

2. Introduction Federal reserve and discounting rates Discount rates and bank interest rates Using monetary policy to avoid inflation How to control money supply

3. Factors affecting federal reserve adjustment rates The banker’s bank Adjustment for inflation Adjustment of discount rates Recession adjustment

4. How discount rate affects interest rates Discount rate is interest rate extended to commercial banks by reserve banks Discount rates increase leads to increase in bank interest rates Decrease in discount rate leads to decrease in interest rate

5. Money policy and inflation Reducing federal fund rates leads to stronger demand for commodities Money policy discourage much borrowing and spending Increase interest rates encouraging saving Reduces disposable income for people with mortgages Discourage exports and encourage importation

6. Controlling money supply Adjusting banks discount rates Adjusting the reserve amount a bank should have Use of open market operations Adjustments on discount lending

7. Stimulus programs effect on money supply Decreases debts Making adjustments on terms of trade Increasing taxes to the citizens Budget cuts

8. Indicators of money supply in circulation Buying rate of the people Increase or decrease in imports and exports Change in cost goods and services Demand of goods and services

9. Adjusting money supply Raise and lowering lending rates Sell of bond and securities Reduce or increase bank reserve Adjustment on discount rates

10. USA and western Sahara compared Denmark has a higher regulatory efficiency than USA Denmark has very high taxes as compared to the USA Interest rates in the USA are higher than in Denmark

11. Conclusion Federal reserve role in inflation control use of monetary policy Other policies Federal reserve as bankers bank Discount rates and interest rate Federal reserve and economy Money supply Trade

12. Reference Dwivedi, D. N. (2010). Managerial economics. New Delhi: Vikas Publishing House Pvt. Ltd. Goyal, A. (2014). History of monetary policy in India since independence. Whittington, O. R. (2012). Wiley CPA Exam Review 2013, Business Environment and Concepts. Hoboken: Wiley.