ECONOMICS
FEDERAL RESERVE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Credit swaps with other central banks
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Open market operations
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Gold and Silver monitoring
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International exchange agreements
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Detailed explanation-1: -In the 1920s, the Federal Reserve relied importantly on the discount window and the rate charged for discounting bills was the primary policy tool to manage credit conditions in the economy. The goal was to accommodate commerce and business, without allowing speculative excesses to create instability.
Detailed explanation-2: -The Fed has traditionally used three tools to conduct monetary policy: reserve requirements, the discount rate, and open market operations. In 2008, the Fed added paying interest on reserve balances held at Reserve Banks to its monetary policy toolkit.
Detailed explanation-3: -The Fed then began to use open-market operations proactively to achieve broad economic objectives-that is, to conduct monetary policy. The Federal Reserve made substantial open-market purchases in both 1924 and 1927.