To keep high inflation from eroding the value of money, monetary authorities in the United States: control the supply of money in the economy.
<h3>What is Inflation?</h3>
Inflation exists as a general increase in the prices of goods and services in an economy. When the general price class rises, each unit of currency buys fewer goods and services; therefore, inflation corresponds to a decrease in the purchasing power of money.
The authority tasked with controlling the inflation level in the united states is the Federal Reserve or only the Fed. The Fed applies monetary policies to maintain inflation within the desired levels of around 2 percent. The Fed restrains the money and credit supply in the economy to keep inflation in check.
When inflation stands high, the prices of goods and services tend to rise, corrupting the value of a currency. In such instances, the Fed will raise interest rates to create the cost of borrowing expensive. If households and firms stand discouraged from accessing credit, the money supply in the economy is determined, which in turn obtains down the rate of inflation.
The complete question is,
To keep high inflation from eroding the value of money, monetary authorities in the United States:
A. create token money that is less than its intrinsic value.
B. make paper money legal tender for the payment of debt.
C. establish insurance on checkable deposit accounts.
D. control the supply of money in the economy.
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