In order to change the money supply, the Fed might use which of the following tools?
A) Dual mandate
B) Reserve requirement
C) Fiscal policy
D) Deficit spending

Question

Quizplus · Accepted Answer

Reserve requirement is a tool used by the Fed to change the money supply. By adjusting the reserve requirement, the Fed can encourage or discourage banks from making loans, thereby affecting the amount of money in circulation. The other options (Dual mandate, Fiscal policy, Deficit spending) are not tools specifically used by the Fed to change the money supply.

In Order to Change the Money Supply, the Fed Might