ECONOMICS
FEDERAL RESERVE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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If the supply of money in the economy increases, the Fed must have ____ the discount rate or the reserve requirement.
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Increased
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Decreased
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Kept the same
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Monitored
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Explanation:
Detailed explanation-1: -The Fed can increase the money supply by lowering the reserve requirements for banks, which allows them to lend more money. Conversely, by raising the banks’ reserve requirements, the Fed can decrease the size of the money supply.
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