By changing its regulations, the Fed ___ force the banking system to increase the money supply; by changing its regulations, the Fed ____ force the banking system to decrease the money supply:
A)Can; can
B)Can; cannot
C)Cannot; can
D)Cannot; cannot.

Question

By changing its regulations, the Fed ___ force the banking system to increase the money supply; by changing its regulations, the Fed ____ force the banking system to decrease the money supply:
A)​Can; can
B)​Can; cannot
C)​Cannot; can
D)​Cannot; cannot.

Quizplus · Accepted Answer

The Fed does not directly control the money supply, but rather uses various tools to influence it. By changing regulations, the Fed can encourage or discourage banks from lending, which may in turn increase or decrease the money supply. However, the Fed cannot directly force the banking system to increase or decrease the money supply through regulations alone.

By Changing Its Regulations, the Fed ___ Force the Banking