The Federal Reserve May Contract the Money Supply By​

question 34

Multiple Choice

The Federal Reserve may contract the money supply by​
1) selling securities
2) buying securities
3) raising reserve requirements
4) lowering reserve requirements

• A)1 and 3​
• B)​1 and 4
• C)​2 and 3
• D)​2 and 4

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Definitions:

Money Income

The total income a person or entity receives in monetary form, including wages, salaries, benefits, and income from investments.

Marginal Rate

A term used to describe the rate at which one variable changes as another variable changes by a single unit, often applied in economic analysis like the marginal tax rate or marginal rate of substitution.

Substitution

The act of replacing one good or service with another due to changes in price or preference.

Price Ratio

The relative price of one good or service in comparison to another, often used in economic analysis and decision-making.