What is the most important source of change in the monetary base?
A)Fluctuations in Treasury spending
B)Changes in the volume of discount loans
C)Changes in the volume of Fed holdings of securities
D)Changes in the value of the money multiplier

Question

Quizplus · Accepted Answer

The most important source of change in the monetary base is typically changes in the volume of Fed holdings of securities. This is because when the Fed purchases securities, it increases the reserves of the financial institutions that hold them, which in turn increases the amount of money that those institutions can lend out. Consequently, an increase in the Fed's holdings of securities can lead to an expansion of the money supply.

What Is the Most Important Source of Change in the Monetary