ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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buy/sell bonds
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increase/decrease discount rate/fed funds rate
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increase/decrease income tax rates
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increase/decrease reserve requirement
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Detailed explanation-1: -Which of the following is NOT one of the Fed’s monetary policy tools? The answer is c) changing the coupon rate. The discount rate, the required reserve ratio is determined by the Fed and the open market operation is also conducted by FED.
Detailed explanation-2: -Answer and Explanation: The Fed does not provide banking services to consumers. It is tasked with oversight over the banking sector, regulating the money supply in the economy and implementing monetary policies.
Detailed explanation-3: -By contrast, if the Fed sells or lends treasury securities to banks, the payment it receives in exchange will reduce the money supply.
Detailed explanation-4: -A larger money supply lowers market interest rates, making it less expensive for consumers to borrow. Conversely, smaller money supplies tend to raise market interest rates, making it pricier for consumers to take out a loan.