The Fed's tools of monetary policy are
A)government expenditures, interest rates, and taxation.
B)open-market operations, lending to banks, reserve requirements, and paying interest on reserves.
C)the money supply, government purchases, and taxation.
D)none of these.

Question

Quizplus · Accepted Answer

The Fed's tools of monetary policy are open-market operations, lending to banks, reserve requirements, and paying interest on reserves. A is incorrect because government expenditures and taxation are tools of fiscal policy, not monetary policy. C is incorrect because while the money supply is a tool of monetary policy, government purchases and taxation are tools of fiscal policy. D is incorrect as the Fed does have tools for monetary policy.

The Fed's Tools of Monetary Policy Are