To keep high inﬂation from eroding the value of money, monetary authorities in the United States

Question

Quizplus · Accepted Answer

To keep high inflation from eroding the value of money, monetary authorities in the United States control the supply of money in the economy. This is accomplished through various tools such as open market operations and adjusting interest rates. By controlling the supply of money, the authorities can manage inflation and prevent it from rising too high. Options A and B refer to the production and use of physical currency, which is one aspect of the monetary system but not the primary tool for managing inflation. Option C refers to deposit insurance, which is a form of protection for consumers but does not directly address inflation.

To Keep High Inﬂation from Eroding the Value of Money