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Respond to the following questions / prompts completely and in your own words.
Respond to the following questions / prompts completely and in your own words.
1. Why are each of the four functions of money important?
2. What makes up the money supply? Consider both M1 and M2. How does the money supply relate to price levels?
3. How do banks play a vital role in the economy while also impacting the money supply?
4. Which two functions of the Federal Reserve do you think are most important and why?
5. How does the Federal Reserve engage in monetary policy? Explain at least two ways.
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