ECONOMICS
MONEY MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Demand the ABC Credit Union reimburse her for Marie’s unauthorized transaction
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File a complaint with the Federal Reserve Board to reimburse her for Marie’s unauthorized transaction
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Demand that the bank where Marie has her checking account reimburse her for Marie’s unauthorized transaction
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No bank or government agency is obligated to reimburse Susan because she authorized Marie to use her ATM card and PIN
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Detailed explanation-1: -The Federal Reserve uses monetary policy to regulate the nation’s money supply. Monetary policy is directed at expanding or contracting the supply of money and credit in the U.S. economy.
Detailed explanation-2: -The Fed has traditionally used three tools to conduct monetary policy: reserve requirements, the discount rate, and open market operations.
Detailed explanation-3: -To increase the (growth of the) money supply, the Fed could either buy bonds, lower the reserve requirement ratio, or lower the discount rate. To decrease the (growth of the) money supply, the Fed could either sell bonds, raise the reserve requirement ratio, or raise the discount rate.
Detailed explanation-4: -The correct answer is a. When the Fed wants to increase the money supply, it implements an expansionary monetary policy. This type of policy includes the decrease of the discount rate, the purchase of government securities, and the reduction of the reserve requirement ratio.