When the Fed Issues Currency

question 194

Multiple Choice

When the Fed issues currency

• A)this increases our money supply only if it replaces old,worn-out currency.
• B)this increases our money supply only if it is used to accommodate the public's desire to hold more currency.
• C)this increases our money supply either if it replaces old,worn currency,or if it is used to accommodate the public's desire to hold more currency.
• D)this does not increase our money supply.

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Definitions:

Socialist Economy

An economic system where the means of production, distribution, and exchange are owned or regulated by the community as a whole.

Market Failure

A situation in which the allocation of goods and services by a free market is not efficient, often leading to a net social welfare loss.

Allocated Efficiently

Refers to the optimal distribution of resources and goods in a way that maximizes the welfare or utility of consumers.

External Costs

Expenses that a business or economic activity imposes on unrelated third parties or the environment, which are not reflected in market prices.