The correct answer is C) The Federal Reserve determines when bills should be removed from circulation and when new bills should be produced.
Although there is no article attached, we can say that the relationship between the Federal Reserve and the money supply is the following: "The Federal Reserve determines when bills should be removed from circulation and when new bills should be produced."
The Federal Reserve or commonly known as the Fed is the Central bank of the United States. In a close work relationship with the US Treasury Department, they pay close attention to the financial system of the country. The Fed and the Treasury Department decide on how much money needs to be printed each year based on the demand expected, the money that is going to be destroyed, and the inventory that exists in the banks.
