ECONOMICS
MONEY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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lowering reserve requirement
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raising the discount rate
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selling bonds
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increasing the rate of interest paid on bank reserves held at the Fed
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Detailed explanation-1: -The Federal Reserve uses three main contractionary monetary tools: increasing interest rates, increasing banks’ reserve requirement, and selling government securities.
Detailed explanation-2: -A contractionary policy is a tool used to reduce government spending or the rate of monetary expansion by a central bank to combat rising inflation. The main contractionary policies employed by the United States include raising interest rates, increasing bank reserve requirements, and selling government securities.
Detailed explanation-3: -Increase the short-term interest rate (discount rate) Raise the reserve requirements. Expand open market operations (sell securities) Reduced inflation. Slow down economic growth. Increased unemployment. 05-Dec-2022