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.

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Definitions:

Legal Remedy

The means by which a court of law enforces a right, imposes a penalty, or makes another court order to impose its will.

Compensatory Damages

Monetary compensation awarded to a plaintiff to offset losses or injuries that have been incurred due to the defendant's actions.

Breaches

Violations or failures to perform as required or promised in a contract or agreement.

Contract

A legally enforceable agreement between two or more parties that creates mutual obligations enforceable by law.