The Tool Most Often Used by the Fed to Control

question 84

Multiple Choice

The tool most often used by the Fed to control the money supply is

• A)changing reserve requirements.
• B)open market operations.
• C)buying and selling of equities.
• D)altering the discount rate.

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Definitions:

Demand Curves

Graphical representations of the relationship between the price of a good and the quantity demanded by consumers at various prices.

Elastic

Describes a situation where the quantity demanded or supplied changes significantly when the price changes.

Marginal Revenue

The additional income received from selling one more unit of a good or service.

Marginal Cost

The additional cost incurred from producing one more unit of a good or service.