The Federal Reserve Bank regulates the money supply by__________________?
Correct answer: D. all of the above
- A. establishing minimum reserve requirements of member banks
- B. the discount rate it charges member banks
- C. buying and selling government securities
- D. all of the above
Explanation
The Federal Reserve influences money creation through reserve requirements, the discount rate, and open-market purchases or sales of government securities. Therefore, all three listed instruments are valid.
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About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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