and there are no inventories,the good will be out of stock for a period,and the firm will lose sales nd profit. fore,take time to produce.When a product is not completely finished,its compo- nents are counted as part of a firm's inventory. 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 goverment bonds by the Fed.If the Fed buys govemment bonds,the dollars it etary base and,therefo nollr空thnd网the mone网 e, he money supply.If the 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 on a given a of deposit multiplier and the money supply.The discount rate is the interest rate that the Fd 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 this increases the monetary base and therefore the money supply. and there are no inventories,the good will be out of stock for a period,and the firm will lose sales and profit. d.Work in process.Many goods require a number of steps in production and,there￾fore,take time to produce.When a product is not completely finished,its compo￾nents are counted as part of a firm’s inventory. 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