Which of the Following Is True About the Federal Reserve

question 129

Multiple Choice

Which of the following is true about the Federal Reserve and its ability to prevent recessions? The Federal Reserve

• A)does not try to eliminate recessions,but instead focuses on preventing inflation.
• B)can fine tune the economy and realistically hope to keep the economy from experiencing recessions.
• C)cannot realistically fine tune the economy,but seeks to keep recessions shorter and milder than they would otherwise be.
• D)cannot realistically fine tune the economy and has little to no effect on the magnitude and length of recessions.

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Definitions:

Store of Value

A function of money allowing individuals to preserve purchasing power for future use.

Asset

Something that is owned by or owed to an individual or a business firm.

Medium of Exchange

An item that is widely accepted in exchange for goods and services, facilitating trade by eliminating the need for a coincidence of wants.

Federal Deposit Insurance Corporation

Insures bank deposits up to $100,000.