Over which of the following definitions of the money supply does the Fed have the most control?
A) M1
B) M2
C) the monetary base
D) savings deposits

Question

Quizplus · Accepted Answer

The monetary base, also known as high-powered money, is the portion of the money supply that the Fed directly controls through its open market operations and reserve requirement policies. It includes currency in circulation and reserves held by commercial banks at the Fed. While the Fed can influence the other measures of the money supply (M1 and M2), it has more direct control over the monetary base.

Over Which of the Following Definitions of the Money Supply