Question 169

Backing paper bank notes with silver to increase the money supply

The excerpt reflects the promotion of backing paper bank notes with silver to increase the money supply. This policy was aimed at addressing economic issues by expanding the monetary base, which was believed to stimulate economic activity.

A) Signing free-trade agreements with foreign nations

Signing free-trade agreements with foreign nations focuses on reducing trade barriers and increasing international commerce. This is not the primary concern reflected in the excerpt, which emphasizes monetary policy rather than trade relations.

B) Enacting more severe tariffs on imported farm goods

Enacting more severe tariffs on imported farm goods aims to protect domestic agriculture by making imported products more expensive. This policy is unrelated to the monetary strategies discussed in the excerpt, which centers on backing currency to increase the money supply.

C) Encouraging the immigration of agricultural workers

Encouraging the immigration of agricultural workers pertains to labor supply in the agricultural sector. This policy does not directly relate to the monetary policies discussed in the excerpt, which focuses on the financial mechanism of backing bank notes.

D) Backing paper bank notes with silver to increase the money supply

Backing paper bank notes with silver to increase the money supply directly aligns with the excerpt's emphasis on monetary policy. This approach was intended to provide stability and confidence in the currency, facilitating economic growth.

E) Creating the Federal Reserve to stabilize the economy during depressions

Creating the Federal Reserve to stabilize the economy during depressions refers to the establishment of a central banking system to manage monetary policy and provide financial stability. While related to economic management, it is not the specific policy promoted in the excerpt.

Conclusion

The correct answer, backing paper bank notes with silver to increase the money supply, is clearly supported by the excerpt's focus on monetary policy. Other options either pertain to trade, labor, or institutional creation, which do not directly address the monetary expansion strategy highlighted in the text. Thus, D is definitively the most relevant choice in this context.