The Federal Reserve System Exercises Its Most Direct Control of the Money

question 8

Multiple Choice

The Federal Reserve System exercises its most direct control of the money supply:

• A)by the issuance of Federal Reserve notes
• B)through reserve requirements
• C)by setting the discount rates on loans to depository institutions
• D)through open market operations

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Definitions:

MP

Member of Parliament; an elected official to the national legislative body in many countries.

Haircuts

A reduction applied to the value of assets for purposes of calculating capital requirements, risk, or losses.

Productive

The efficiency at which an individual, company, or economy can convert input resources into useful output.

Diminish Profits

The reduction in the amount of earnings as a result of increased costs, decreased revenue, or both.