The major tools of monetary policy available to the Federal Reserve System are
A) reserve requirements, margin regulations, and moral suasion.
B) reserve requirements, open-market operations, and the discount rate.
C) open-market operations, margin regulations, and moral suasion.
D) the discount rate, margin regulations, and moral suasion.

Question

Quizplus · Accepted Answer

The Federal Reserve System has three major tools of monetary policy: reserve requirements, open-market operations, and the discount rate. Reserve requirements are the amount of funds that banks must hold in reserve against deposits; open-market operations involve the buying and selling of government securities on the open market to influence the money supply; and the discount rate is the interest rate banks pay when they borrow funds from the Federal Reserve. Margin regulations and moral suasion are not major tools of monetary policy.

The Major Tools of Monetary Policy Available to the Federal