Question

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.

Answer 1

Answer:

D.control the supply of money in the economy.

Explanation:

The authority tasked with regulating the inflation level in the united states in the Federal Reserve or only the Fed. The Fed applies monetary policies to keep inflation within the desired levels of around 2 percent. The Fed regulates the money and credit supply in the economy to keep inflation in check.

When inflation is high, the prices of goods and services tend to rise, eroding the value of a currency. In such instances, the Fed will raise interest rates to make the cost of borrowing expensive.  If households and firms are discouraged from accessing credit, the money supply in the economy is restricted, which in turn brings down the rate of inflation.