ECONOMICS
MONETARY POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Monetary policy reflects the Federal Reserve’s authority to change the money supply and effect the availability of credit
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Monetary policy reflects the Federal Reserve’s authority to change tax rates
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Monetary policy refers to the Federal Reserve’s influence in the economy through borrowing and creating a deficit.
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Monetary policy refers to the Federal Reserve’s authority to increase government spending
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Detailed explanation-1: -The FOMC changes monetary policy primarily by raising or lowering its target for the federal funds rate, the interest rate for overnight borrowing between banks. Lowering the target rate represents an “easing” of monetary policy, while increasing the target rate is a “tightening” of policy.
Detailed explanation-2: -The Fed, as the nation’s monetary policy authority, influences the availability and cost of money and credit to promote a healthy economy. Congress has given the Fed two coequal goals for monetary policy: first, maximum employment; and, second, stable prices, meaning low, stable inflation.
Detailed explanation-3: -Answer and Explanation: The correct answer is a) interest rates. The central bank uses this method alongside other monetary policy tools to alter the money supply.
Detailed explanation-4: -The correct answer is B. Monetary policy is established by the Federal Open Market Committee. The Federal Reserve System has twelve Federal Reserve banks whereby there is one represented in each Federal Reserve districts.