ecautiona children does not increase desired saving.For example.having children raises the bequest motive,but it may also lower the precautionary motive:you can rely on your children in case of financial emergency.Perhaps the two effects on saving cancel each other 10 What are the three ways in which the federal Reserve can influence the money supply. 10.The Fed influences the money supply through open-market operations,reserve ount rate. and I governn pud uauanos Sknd papaa pays for the bonds increase the monetary base and,therefore,the money supply.If the Fed sells government bonds,the dollars it receives for the bonds reduce the monetary base and therefore the money supply.Reserve requirements are regulations imposed by the Fed that require banks to m ntain a minim um reserve-deposit ratio.A decrease in the reserve requirements lowers the reserve-deposit ratio,which allows banks to make more loans on a given amount of deposits and.therefore.increases the money multiplier and the money supply.The discount rate is the interest rate that the Fed charges banks to borrow money.Banks borrow from the Fed if their reserves fall below the reserve requirements.A decrease in the discount rate makes it less s to b w reserves erefore,banks will be likely to b theeisinereases the monetary base and thereforethe mones row moreprecautionary motive;the bequest motive is presumably stronger for people who have children than for those who don’t. An alternative interpretation is that perhaps having children does not increase desired saving.For example,having children raises the bequest motive,but it may also lower the precautionary motive:you can rely on your children in case of financial emergency.Perhaps the two effects on saving cancel each other. 10 What are the three ways in which the federal Reserve can influence the money supply. 10.The Fed influences the money supply through open-market operations,reserve requirements,and the discount rate.Open-market operations are the purchases and sales of government bonds by the Fed.If the Fed buys government bonds,the dollars it pays for the bonds increase the monetary base and,therefore,the money supply.If the Fed sells government bonds,the dollars it receives for the bonds reduce the monetary base and therefore the money supply.Reserve requirements are regulations imposed by the Fed that require banks to maintain a minimum reserve–deposit ratio.A decrease in the reserve requirements lowers the reserve–deposit ratio,which allows banks to make more loans on a given amount of deposits and,therefore,increases the money multiplier and the money supply.The discount rate is the interest rate that the Fed charges banks to borrow money.Banks borrow from the Fed if their reserves fall below the reserve requirements.A decrease in the discount rate makes it less expensive for banks to borrow reserves.Therefore,banks will be likely to borrow more from the Fed;thisincreases the monetary base and therefore the money supply