Which of the following is a potential monetary policy instrument for the Fed?
A) government budget deficit
B) income tax rates
C) federal funds rate
D) profit rates

Question

Quizplus · Accepted Answer

The federal funds rate is a potential monetary policy instrument for the Fed. It is the interest rate at which depository institutions (banks and credit unions) lend reserve balances to each other overnight, on an uncollateralized basis. The Fed can adjust this rate to change the availability of credit and control inflation. A, B, and D are not monetary policy instruments used by the Fed.

Which of the Following Is a Potential Monetary Policy Instrument