It Is Necessary for the Federal Reserve to Regulate the Money

question 51

Multiple Choice

It is necessary for the Federal Reserve to regulate the money supply because

• A)banks tend to act in a counter-cyclical manner with regard to the money supply.
• B)banks are not profit oriented and tend to be unresponsive to the needs of business.
• C)left to itself, the banking system will create a gyrating money supply that will be destabilizing.
• D)left to itself, the banking system will not be able to increase or decrease the money supply.

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Definitions:

Economic Growth

An increase in the production of goods and services in an economy over a period of time, often measured by GDP.

Central Banks

The primary financial institutions of countries, responsible for monetary policy, currency issuance, and financial stability.

Per Capita Income

The mean amount of money made by each individual in a specific region or nation, determined by dividing the region's total earnings by the number of people living there.

Industrially Advanced Countries

Refers to nations with highly developed economies, significant industrial production, and advanced technological infrastructure.