In Its Function of Controlling the Money Supply, the Fed

question 65

Multiple Choice

In its function of controlling the money supply, the Fed does not do which one of the following?

• A) Controls the money supply.
• B) Clears checks.
• C) Regulates banks.
• D) Offer checking accounts to the public.

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Definitions:

MPC

Stands for Marginal Propensity to Consume, indicating the proportion of additional income that is spent on consumption.

Tax Cut

A reduction in the amount of taxes that individuals or companies are required to pay to the government.

Taxes

Required financial obligations or other sorts of charges enforced on a taxpayer by a government agency for the purpose of funding governmental activities and several public spending.

Interest Rates

The percentage at which interest is paid by a borrower for the use of money they borrow from a lender, indicative of the cost of borrowing.