Bank Lending and Deposits Tend to Change as Interest Rates

question 140

Multiple Choice

Bank lending and deposits tend to change as interest rates change.Can the Fed counteract this tendency?

• A)Yes, through its ability to affect the money supply.
• B)Yes, through its ability to change tax levels.
• C)No, the Fed is forbidden by the Constitution from intervening in the economy.
• D)No, the Fed almost always follows a passive monetary policy.