Which of the Following Most Clearly Limits the Ability of the Commercial

question 172

Multiple Choice

Which of the following most clearly limits the ability of the commercial banking industry to expand the money supply?

• A) The reserve requirements mandated by the Fed.
• B) The number of commercial bank charters issued by the Fed.
• C) The dollar value of the bonds issued by the U.S. Treasury.
• D) The federal funds interest rate that commercial banks pay (and receive) for short-term loanable funds.

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Definitions:

Electronic Transfer

The digital exchange of money between accounts, which can occur within the same financial institution or across different institutions.

Marketable Securities

Financial instruments and assets that can be easily sold or converted into cash, often used for short-term investments or liquidity purposes.

Operating Assets

Operating assets are the assets that a business uses to generate revenue as part of its core operations, excluding investments and cash reserves.

Current Asset

An asset on the balance sheet that is expected to be sold or otherwise used up in the near term, typically within one year, including cash, inventory, and receivables.