The Federal Reserve's policy of buying bonds, adding to bank reserves, can be referred to by any of these terms EXCEPT
A) quantitative easing.
B) expansionary monetary policy.
C) tight money policy.
D) easy money policy.

Question

Quizplus · Accepted Answer

The policy of buying bonds and adding to bank reserves is an expansionary monetary policy designed to stimulate the economy by increasing the money supply. This policy is commonly referred to as quantitative easing or easy money policy. Tight money policy, on the other hand, is a contractionary monetary policy that seeks to reduce the money supply and slow down economic growth. Therefore, neither option A nor D can be eliminated. The correct answer is C because tight money policy is the opposite of the policy being implemented by the Federal Reserve.

The Federal Reserve's Policy of Buying Bonds, Adding to Bank