A Problem That the Fed Faces When It Attempts to Control

question 82

Multiple Choice

A problem that the Fed faces when it attempts to control the money supply is that

• A)the 100-percent-reserve banking system in the U.S.makes it difficult for the Fed to carry out its monetary policy.
• B)the Fed has to get the approval of the U.S.Treasury Department whenever it uses any of its monetary policy tools.
• C)the Fed does not have a tool that it can use to change the money supply by either a small amount or a large amount.
• D)the Fed does not control the amount of money that households choose to hold as deposits in banks.

---

Definitions:

Ethical Dilemma

A situation involving a difficult choice between alternatives that all have potential moral implications.

Conceptualizing

The process of forming a clear and detailed idea or theory in the mind.

Feedback

Information given to individuals or groups about their performance or behavior, intended to guide future improvements or adjustments.

Agency Policies

Rules and guidelines adopted by an organization that dictate how various situations or processes are to be handled within that organization.