One of the Federal Reserve's most powerful tools is its influence over _____,not its influence over _____.
A) expectations;aggregate supply
B) expectations;the money supply
C) the money supply;expectations
D) aggregate supply;aggregate demand

Question

Quizplus · Accepted Answer

The Federal Reserve's most powerful tool is its influence over the money supply, not its influence over expectations. Therefore, option B is the correct choice. Option A is incorrect because while the Fed does influence expectations, it is not its most powerful tool. Option C is incorrect because it reverses the order of importance of the tools. Option D is incorrect because the Fed's influence over aggregate demand and supply is secondary to its influence over the money supply.

One of the Federal Reserve's Most Powerful Tools Is Its