ECONOMICS
FISCAL POLICY
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Taxing and spending
|
|
|
Interest rates and reserve requirements
|
|
|
legislation and enforcement
|
|
|
interest rate and tax rates
|
Detailed explanation-1: -The key tools of monetary policy are “administered rates” that the Federal Reserve sets: Interest on reserve balances; the Overnight Reverse Repurchase Agreement Facility; and the discount rate.
Detailed explanation-2: -The Fed has traditionally used three tools to conduct monetary policy: reserve requirements, the discount rate, and open market operations.
Detailed explanation-3: -The Fed implements monetary policy by using its monetary policy tools, such as the interest of reserve balances rate (red) and overnight reverse repurchase agreement rate (blue), to ensure interest rates are consistent with the federal funds rate target.
Detailed explanation-4: -The Federal Reserve controls the three tools of monetary policy–open market operations, the discount rate, and reserve requirements.