Question

Why does the federal reserve alter monetary policy?

Answer 1

The monetary policy is how the monetary authority controls the money. Business cycles are basically how the GDP changes over time. The monetary policy would therefore be modified based on what stage the business cycle is on, in order to make it so the country doesn't lose all their money.

Step-by-step explanation:

Answer 2

Fed monetary policy actions alter the supply of reserves in the banking system. When more reserves are available in the banking system, the federal funds rate goes lower, reflecting an excess of supply over demand. In this way, the Fed is able to keep the federal funds rate close to its target.

Step-by-step explanation: