The Fed Can Influence the Money Supply by

question 128

Multiple Choice

The Fed can influence the money supply by

• A)changing how much it lends to banks.
• B)changing the interest rate it pays banks on the reserves they are holding.
• C)using open-market operations.
• D)All of the above are correct.

---

Definitions:

Option Contract

A contract which grants the holder the right, but not the obligation, to buy or sell an asset at a specified price on or before a specified date.

Unilateral Contract

is a type of contract where only one party makes a promise or undertakes a performance obligation in exchange for an act by the other party, creating a binding agreement once the act is performed.

Revocable Offer

An offer that can be withdrawn by the offering party before it is accepted by the offeree, typically within a certain time frame.

Unilateral Offer

An offer made by one party where acceptance is performed through an action rather than a promise of action.