In the United States, the money supply is determined:
A) only by the Fed.
B) only by the behavior of individuals who hold money and of banks in which money is held.
C) jointly by the Fed and by the behavior of individuals who hold money and of banks in which money is held.
D) according to a constant-growth-rate rule.

Question

Quizplus · Accepted Answer

The money supply in the United States is determined jointly by the Fed and by the behavior of individuals who hold money and banks in which money is held. The Fed has the power to influence the money supply through various monetary policy tools, such as open market operations, reserve requirements, and the discount rate. However, the behavior of individuals and banks also plays a role in determining the amount of money in circulation, as it affects the demand for and supply of money. Therefore, the money supply in the United States is determined by both the actions of the Fed and the behavior of market participants.

In the United States, the Money Supply Is Determined