Final answer:
The Fed influences the nation's output by manipulating the money supply through monetary policy.
Step-by-step explanation:
True. The Federal Reserve, also known as the Fed, has the power to influence the nation's output by manipulating the money supply through monetary policy. When the Fed increases the money supply, it stimulates economic growth and increases output. Conversely, when the Fed decreases the money supply, it slows down economic growth and decreases output.
For example, during a recession, the Fed may implement expansionary monetary policy by increasing the money supply and lowering interest rates. This encourages businesses and consumers to borrow and spend more, stimulating economic activity and increasing output.