The Fed's monetary policy tools
A)have proven to be of little value in helping the Fed to achieve its monetary policy goals.
B)have allowed the Fed to achieve its monetary policy goals directly.
C)have allowed the Fed to achieve its monetary policy goals indirectly.
D)are no longer as effective in achieving its monetary policy goals, due to restrictive legislation passed by Congress in the 1990s.

Question

Quizplus · Accepted Answer

The Fed's monetary policy tools have allowed the Fed to achieve its monetary policy goals indirectly. The Fed uses these tools to influence the supply of money and credit in the economy, which in turn affects interest rates, inflation, and economic growth. By adjusting these tools, the Fed can attempt to stabilize the economy and promote its goals of full employment and stable prices. While there is some debate about the effectiveness of these tools, they have been used successfully in the past to promote economic stability.

The Fed's Monetary Policy Tools