'For purposes of monetary policy, the Federal Reserve has targeted the interest rate known as the federal funds rate: Treasury bill rate_ discount rate: prime rate:'
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The Federal Reserve policy makers use several different tools to influence the money supply and interest rates. The three primary tools used are the operations of the Federal Open Market Committee (FOMC), reserve requirements, and the discount rate. Describe each of these tools regarding how they are used by the Federal Reserve to influence the money supply and interest rates. Include in your answer the difference between expansionary and contractionary monetary policies.
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