Abeka Economic – Work and Prosperity Test 6 Practice

Controlling the money supply means managing how much money is available in the economy to influence inflation and interest rates. The United States’ central bank, the Federal Reserve, is the institution responsible for this. It uses tools like open market operations (buying or selling government securities to add or remove bank reserves), setting reserve requirements for banks, and adjusting the discount rate. Through these actions, the Fed can expand or contract the money supply and steer short-term interest rates toward goals like price stability and maximum employment. The IMF and World Bank are international organizations that don’t control domestic money supply, and the Treasury handles government finances and debt but does not manage the money supply.