Homework Answers
When the Federal Reserve will be buying the bonds out of the market it will mean that the Federal Reserve is buying the United State securities and it is trying to provide the funds back to the banks and it will increase the bank liquidity and it will increase the bank lending ability also, the bank will be able to lend more into the overall economy and it will increase the money flow into the economy so Federal Reserve is trying to provide an stimulation to the overall money flow into the economy.
Increase of discount loans by bank will also be leading to increase in monetary supply to the overall economy and it will be helpful in stimulation of the demand because the banking companies are trying to stimulate the economy through providing loans at a cheaper rates.
So it can be said that this both measures are to increase the money flow into the entire economy.
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