The United States Federal Reserve is currently the money supply with the intention of keeping short-term interest rates OA. increasing, high O B. increasing, low OC. decreasing, low O D. decreasing, high Reset Selection
The United States Federal Reserve is currently the money supply with the intention of keeping short-term interest rates OA. increasing, high O B. increasing, low OC. decreasing, low O D. decreasing, high Reset Selection
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:The United States Federal Reserve is currently the money supply with the intention of keeping short-term interest rates
O A. increasing, high
B. increasing, low
O C. decreasing, low
O D. decreasing, high
Reset Selection
Expert Solution
Step 1
The central bank controls the money supply and is responsible for maintaining low and stable inflation in the economy.
Monetary policy refers to the action taken by the central bank to interfere in the economy and push the economy towards the full employment level of output.
Monetary policy works through the change in the money supply.
When the central bank increases the money supply, it is known as expansionary monetary policy, and when the central bank decreases the money supply, it is known as contractionary monetary policy.
Step by step
Solved in 2 steps
Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education