Which of the Following Would NOT Decrease the Supply of Money

question 110

Multiple Choice

Which of the following would NOT decrease the supply of money in a fiat money economy?

• A) The Federal Reserve decides to link the value of money to a scarce, rare earth metal.
• B) The Federal Reserve decides to sell existing treasury securities.
• C) The Federal Reserve increases the required reserve ratio.
• D) The Federal Reserve increases the discount rate.
• E) The Federal Reserve decides to link the value of money to water (a commodity).

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Definitions:

Govern

The act of conducting policy, actions, and affairs of a state, organization, or people, often through established laws and authorities.

Liquidated Damages

A predetermined amount of money that parties to a contract agree upon as compensation in case of a breach of the contract.

Reasonably Related

A connection or relevance between two or more things that is fair, sensible, or logical.

Compensatory Damages

Monetary awards given to a plaintiff to compensate for loss, damage, or injury suffered due to another's breach of duty or negligence.