In the United States, the purchasing power of money is determined by
A) the underlying precious metals that back each unit of currency.
B) the value of U.S. treasury bonds that back each unit of currency.
C) Federal Reserve policy, which controls the money supply.
D) Congress, which controls the money supply.

Question

Quizplus · Accepted Answer

The Federal Reserve is responsible for controlling the money supply in the United States, which in turn affects the purchasing power of money. The value of U.S. treasury bonds may affect the value of the dollar in international markets, but it does not directly determine the purchasing power of money within the United States. Congress has some authority over the money supply, but ultimately it is the Federal Reserve's policy decisions that play the largest role in determining the purchasing power of money. Precious metals no longer back the U.S. dollar.

In the United States, the Purchasing Power of Money Is