ECONOMICS
MONETARY POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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reserve requirements, discount rate, open market operations
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check clearing, distribution of currency, banks supervision
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promote economic growth, stable prices, and control unemployment
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None of the above
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Detailed explanation-1: -The Fed uses three primary tools in managing the money supply and pursuing stable economic growth. The tools are (1) reserve requirements, (2) the discount rate, and (3) open market operations. Each of these impacts the money supply in different ways and can be used to contract or expand the economy.
Detailed explanation-2: -A nation’s central bank is usually given a mix of responsibilities including determining the money supply, supervising banks, providing banking services for the government, lending to banks during crises, and promoting consumer protection and community development.
Detailed explanation-3: -When prices are stable, long-term interest rates remain at moderate levels, so the goals of price stability and moderate long-term interest rates go together. As a result, the goals of maximum employment and stable prices are often referred to as the Fed’s “dual mandate.”
Detailed explanation-4: -Overview of the Federal Reserve System. The Federal Reserve performs five key functions in the public interest to promote the health of the U.S. economy and the stability of the U.S. financial system. Conducting Monetary Policy. Supervising and Regulating Financial Institutions and Activities. 20-Jan-2023