Which of the Following Would NOT Increase the Supply of Money

question 23

Multiple Choice

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

• A) The Federal Reserve decides to purchase existing treasury securities.
• B) The Federal Reserve decreases the required reserve ratio.
• C) The Federal Reserve decreases the discount rate.
• D) There is a discovery of gold.
• E) The Federal Reserve decides to link the value of money to water (a commodity).

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Definitions:

Monetary Policy

Government or central bank policies aimed at controlling the supply of money and interest rates in an economy.

Fiscal Policy

A government's strategy for managing its budget, especially through taxation and spending decisions, to influence the economy.

Aggregate Demand

The entire market demand for goods and services within an economic environment, determined at an established price level over a fixed duration.

Stock Prices

The market price at which shares of a public company's stock are bought and sold.