It is necessary for the Federal Reserve to regulate the money supply because
A. banks tend to act in a counter-cyclical manner with regard to the money supply.
B. banks are not profit oriented and tend to be unresponsive to the needs of business.
C. left to itself, the banking system will create a gyrating money supply that will be destabilizing.
D. left to itself, the banking system will not be able to increase or decrease the money supply.
Answer: C
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