A Decrease in the Money Stock by the Federal Reserve

question 59

Multiple Choice

A decrease in the money stock by the Federal Reserve

• A) shifts the supply of loanable funds to the left, decreasing interest rates.
• B) shifts the demand for loanable funds to the left, increasing interest rates.
• C) shifts the supply of loanable funds to the left, increasing interest rates.
• D) shifts the supply of loanable funds to the right, increasing interest rates.

---

Definitions:

Saving

The process of setting aside a portion of current income for future use, either by depositing money in a bank or purchasing financial instruments.

Benefits-Received Principle

A theory of fairness holding that taxpayers should contribute to government (in the form of taxes) in proportion to the benefits they receive from public expenditures.

Public Goods

Items whose consumption is not depleted by an additional consumer and from which individuals cannot be excluded from using.

Tax Revenue

Revenue earned by governments through the application of taxes.