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The Fed Has Imperfect Control Over the Money Supply

Question 31

Multiple Choice

The Fed has imperfect control over the money supply:


A) because of unpredictable changes in reserve requirements.
B) because the public responds to open market operations in an unpredictable fashion.
C) because the Fed does not know how much reserves will change when it buys or sells securities.
D) because of unpredictable changes in public desire to hold cash and banks' desires to hold excess reserves.
E) because money supply is also determined by demand-side factors.

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