In the model of the money supply process,the Federal Reserve's role in influencing the money supply is represented by

Question

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The model of the money supply process takes into account several variables that influence the money supply, including the required reserve ratio, nonborrowed reserves, borrowed reserves, and the market interest rate. The Federal Reserve can influence the money supply through changes in any of these variables. For example, it can increase the money supply by lowering the reserve requirement or by buying government securities, which adds reserves to the banking system. It can also reduce the money supply by raising the reserve requirement or by selling government securities, which drains reserves from the banking system. Therefore, option B is the correct representation of the Federal Reserve's role in influencing the money supply.

In the Model of the Money Supply Process,the Federal Reserve's