The four main tools of monetary policy are
A) tax-rate changes, the discount rate, open-market operations, and the federal funds rate.
B) tax-rate changes, changes in government expenditures, open-market operations, and interest on excess reserves.
C) the discount rate, the reserve ratio, interest on excess reserves, and open-market operations.
D) changes in government expenditures, the reserve ratio, the federal funds rate, and the discount rate.

Question

Quizplus · Accepted Answer

The four main tools of monetary policy are the discount rate, the reserve ratio, interest on excess reserves, and open-market operations. Tax-rate changes and changes in government expenditures are tools of fiscal policy, not monetary policy. The federal funds rate is indirectly influenced by the Fed's monetary policy tools.

The Four Main Tools of Monetary Policy Are