Ahlai works for the Fed and is conducting a seminar about money supply. An attendee says he thinks people borrow too much money and suggests that the Fed remove half of the money in the money supply. What would be Ahlai'sbest response regarding the outcome if the Fed followed this advice?
A) Consumer borrowing would go up.
B) There would be an oversupply of goods and services.
C) Prices for goods and services would increase.
D) The reserve requirement would decrease.
E) There would be fewer bonds available for the Fed to buy.

Question

Quizplus · Accepted Answer

Removing half of the money in the money supply would likely lead to a decrease in consumer spending, resulting in an oversupply of goods and services since demand would drop significantly.

Ahlai Works for the Fed and Is Conducting a Seminar