ECONOMICS
MONEY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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protect the nation
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manage and control the money supply
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make sure all goods are safe
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All of the above
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Detailed explanation-1: -The tool that the Federal Reserve tends to use most to control the money supply is the interest rates tool. The Federal Reserve prefers this tool rather than the other tools because of its ability to control the amount borrowed from banks easily.
Detailed explanation-2: -The Fed controls the supply of money by increas-ing or decreasing the monetary base. The monetary base is related to the size of the Fed’s balance sheet; specifically, it is currency in circulation plus the deposit balances that depository institutions hold with the Federal Reserve.
Detailed explanation-3: -The primary way the Fed controls the monetary base is through open market operations: buying or selling securities. To increase the monetary base, the Fed buys securities from any party and pays with a check.