A central bank such as the Federal Reserve uses selective credit controls to affect the financial system. An example of a selective credit control is:
A) The discount rate
B) Reserve requirements
C) Legal interest-rate ceilings
D) Open-market operations

Question

Quizplus · Accepted Answer

Selective credit controls are specific measures aimed at controlling the amount of credit that can be extended for certain purposes. Legal interest-rate ceilings, which limit the interest rates that can be charged on loans, are an example of such controls. They are used to directly influence the cost and availability of credit for specific sectors or types of loans, unlike the discount rate, reserve requirements, and open-market operations, which affect the overall credit market.

A Central Bank Such as the Federal Reserve Uses Selective