Government Monetary Authorities Manipulate the Supply of Money in the Economy

question 161

Multiple Choice

Government monetary authorities manipulate the supply of money in the economy primarily to

• A)ensure high profits for commercial banks.
• B)provide sufficient currency to individuals and businesses to conduct their daily business.
• C)keep the dollar strong measured against the currencies of foreign nations.
• D)influence the interest rate and the levels of investment, output, and prices in the economy.

---

Definitions:

U.S. Government Securities

Fixed-income investments backed by the full faith and credit of the United States government, including Treasury bills, notes, and bonds.

Money Supply

The total amount of monetary assets available in an economy at any specific time.

Interest Rate

The expense, quantified as a percentage of the principal, charged by a lender to a borrower for the use of resources.

Demand for Money

The desire to hold cash or easily liquidable assets, influenced by interest rates, income levels, and economic activity.