WHICH OF THE FOLLOWING BEST DESCRIBES THE ORGANIZATION OF THE PASSA...

Which of the following best describes the organization of the passage?

A. Opposing viewpoints of an issue

B. A theme followed by an example

C. A problem and its causes

D. A problem and a solution

Part 3: Read the following passage and choose the best answer for each question (10 points, 2 for each correct answer)

It is the role of the Federal Reserve, known simply as the Fed, to control the supply of money in the U.S. through

its system of twelve regional Federal Reserve Banks, each with its own Federal Reserve District Bank. Many commercial

banks belong to the Federal Reserve System and as members must follow the Fed’s reserve requirements, a ruling by the

Fed on the percentage of deposits that a member bank must keep either in its own vaults or on deposit at the Fed. If the Fed

wants to change the money supply, it can change reserve requirements to member banks; for example, an increase in the

percentage of deposits required to be kept on hand would reduce the available money supply. Member banks can also

borrow money from the Fed, and an additional way that the Fed can control the money supply is to raise or lower the

discount rate, the interest rate at which commercial banks borrow from the Fed. An increase in the discount rate would

reduce the funds available to commercial banks and thus shrink the money supply. In addition to using reserve

requirements and the discount rate to control the money supply, the Fed has another powerful tool: open-market operations.