Question

The money supply is controlled by the Federal Reserve in order to better manage the ______ of goods and services.

Options:
a) Quantity
b) Quality
c) Distribution
d) Production

Answer 1

The Federal Reserve controls the money supply to manage the distribution of goods and services, with the goal of influencing the economy.

Step-by-step explanation:

The money supply is controlled by the Federal Reserve in order to better manage the distribution of goods and services. The correct option in this context is (c) Distribution. The Federal Reserve, through its monetary policy, adjusts the money supply to influence the economy. It uses tools like reserve requirements, the discount rate, and open market operations to achieve its goals, which include stabilizing prices and maximizing employment. Adjusting the money supply helps to manage how resources, including goods and services, are allocated within the economy. This does not directly control the quantity, quality, or production of goods and services, but rather influences the economic conditions that determine their distribution.