Answer the following statement(s) true (T) or false (F)

1. The government can influence the economy through its fiscal policy by making changes in the money supply.
2. When the Federal Reserve Bank buys or sells U.S. securities, it changes the level of reserves in the banking system, which has an effect on interest rates.
3. The discount rate is the interest rate banks are charged when they borrow money from the Fed.
4. The Fed relies primarily on changes in the reserve requirement (the minimum amount of money banks must hold in reserve to cover deposits) to ease or tighten the money supply.


1. False
2. True
3. True
4. False

Economics

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