EBK THE ECONOMICS OF MONEY, BANKING AND
EBK THE ECONOMICS OF MONEY, BANKING AND
5th Edition
ISBN: 9780134734545
Author: Mishkin
Publisher: YUZU
bartleby

Concept explainers

Question
Book Icon
Chapter 17, Problem 8Q
To determine

If the statement - FED can perfectly control the amount of monetary base, but has less control over the composition of monetary base” is true, false or uncertain.

Concept Introduction:

The sum of banking reserves and the currency in circulation is referred to as high-powered money or monetary base. Monetary base is different from money supply, which is the FED’s measure of money that is monetary aggregate.

It is only to a certain limit by interest rates, open market operations, and other such quantitative tools that Federal Reserve can control the amount of monetary base. At the end, it is the banks that decide how much they should borrow from the Federal System or how much they should hold. The people could decide how to hold their money in the deposits, so the statement Fed perfectly controls the amount of monetary base is incorrect.

Blurred answer
Knowledge Booster
Background pattern image
Economics
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Text book image
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:9780190931919
Author:NEWNAN
Publisher:Oxford University Press
Text book image
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Text book image
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Text book image
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Text book image
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Text book image
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education