Question

· setting the discount and interest rates · establishing reserve requirements for banks · buying and selling US government securities All of these are ways in which the Federal Reserve system can A) control the stock market. B) regulate the money supply. C) decrease consumer spending. D) challenge Presidential power.

Answer 1

Answer:

B) regulate the money supply

Explanation:

Interest rates determine if investors will continue having their money in bank accounts OR if they will spend it for consumption, which means more production (more money supply).

If government establishes that banks need more reserves, this means that banks will have more money to lend, lent money also means more investment in production and more employment (more money supply).

Buying US government securities means that the government releases more money to the market (more money supply); on the contrary, selling US government securities means that government recovers money from the market (less money supply).