Final answer:
Banks can influence the money supply through a)making loans which creates new money in the form of deposits that can be spent, but they do not conduct fiscal policy, change interest rates directly, or print money, as those are roles for government and central banks.
Step-by-step explanation:
Banks can influence the money supply primarily through making loans. When banks provide loans, they essentially create new money, as the loans turn into deposits that borrowers can spend.
However, banks do not engage in conducting fiscal policy, changing interest rates directly, or printing money as these functions are the responsibilities of government and central banks, respectively.
Fiscal policy is decided by the government, which involves changing tax rates and levels of government spending. Changing interest rates is indeed a tool for central banks, but this is generally achieved through open market operations, reserve requirements.
The discount rate, as opposed to being a direct action of commercial banks. Finally, printing money is exclusively carried out by the mint under the direction of the central bank and is not a function that commercial banks can perform.
The most crucial tool for central banks to conduct monetary policy is open market operations. In addition to this, central banks can adjust reserve requirements and discount rates.
These efforts, particularly open market operations, help to regulate the amount of money and credit available in the economy, thereby influencing overall economic activity and policy goals, such as low unemployment and low inflation.
The United States Federal Reserve, for instance, uses these monetary policy tools to maintain a balance between ensuring economic stability and growth.