Which Tool Does the Fed Use Most Commonly to Increase

question 1

Multiple Choice

Which tool does the Fed use most commonly to increase the money supply?

• A) increase discount lending
• B) raise the reserve requirement
• C) changing deposit insurance requirements
• D) none of the above

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Definitions:

Demand Curve

A graph representing the relationship between the price of a good and the quantity of that good consumers are willing and able to purchase at various prices.

Supply Curve

A graph that shows the relationship between the price of a good and the quantity of that good that producers are willing to supply.

Y Axis

The vertical line on a graph or chart, which typically represents the range of values for a variable being measured.

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good that suppliers are willing and able to sell, typically sloping upward.