Which of the following is NOT a Monetary policy tool available to the FED?

Question

BlackTom AI · Accepted Answer

To assess which item is not a monetary policy tool used by the FED, we need to recall what the FED can directly deploy to influence money supply and rates.
Option 1: Open market operations. This is a core tool in which the Fed buys or sells Treasuries to influence reserves and the federal funds rate. It is definitely a monetary policy instrument.
Option 2: The federal funds rate. This is the target rate the Fed aims to influence through its tools, not a tool itself. It represents the policy stance or objective rather than a mechanism like purchases, lending, or reserve changes. This distinction makes it a target rather than a tool.
Option 3: Discount loans. The discount window provides banks with overnight liquidity, and the Fed uses this facility as a monetary policy tool to affect short-term credit conditions and reserves. It is a direct tool.
Option 4: Interest on Reserve Balances. Paying interest on reserves held at the Fed is used to influence the floor level for the federal funds rate and to manage reserve incentives. This is another official tool.
In summary, open market operations, discount loans, and interest on reserve balances are direct instruments the Fed uses to implement policy, whereas the federal funds rate is the policy target they strive to achieve using those tools.

ECON 2002.01 AU2025 (21333) Final Exam- Requires Respondus LockDown Browser

Which of the following is NOT a Monetary policy tool available to the FED?

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ECON 2002.01 AU2025 (21333) Final Exam- Requires Respondus LockDown Browser

Which of the following is NOT a Monetary policy tool available to the FED?

查看解析

登录即可查看完整答案

类似问题

Which of the following agencies has primary responsibility for setting monetary policy and regulating the banking system?

Why is psychology important in a country’s monetary policy?

If the economy is producing an equilibrium real output that is less than potential output, a(n):

The RBA can stimulate the economy by _____, all of which shifts the aggregate demand to the _____.

If the cash rate is increased, the RBA is trying to:

Select the option that correctly shows all the missing words in the following sentence.Monetary policy is the management of ________ by changing money _______ for the purpose of adjusting aggregate _____.

According to the graph, contractionary monetary policy will cause an economy that is initially at full-employment output to go from equilibrium _______ to equilibrium ________ in the short run.

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The RBA can stimulate the economy by _, all of which shifts the aggregate demand to the _.

Select the option that correctly shows all the missing words in the following sentence.Monetary policy is the management of ____ by changing money _ for the purpose of adjusting aggregate ___.

According to the graph, contractionary monetary policy will cause an economy that is initially at full-employment output to go from equilibrium _ to equilibrium __ in the short run.