Which of these is considered to be one of the Federal Reserve's normal monetary policy tools?
A) making loans to firms outside the banking industry
B) lowering the federal funds rate
C) buying mortgage-backed securities
D) dramatically increasing the monetary base

Question

Quizplus · Accepted Answer

Lowering the federal funds rate is one of the typical tools used by the Federal Reserve to implement monetary policy. The federal funds rate is the interest rate at which banks lend to each other overnight, and changes in this rate can have a ripple effect on the broader economy. The Federal Reserve can adjust the federal funds rate through its open market operations, which involve buying or selling government securities in the open market.

Which of These Is Considered to Be One of the Federal