Which of the following is an instrument of monetary policy?
A)The interest rate on three-month Treasury bills
B)The mortgage interest rate
C)The discount rate
D)The budget deficit

Question

Quizplus · Accepted Answer

The discount rate, set by the Federal Reserve, is an instrument of monetary policy that affects the cost of borrowing for banks and can influence the level of economic activity. The interest rate on Treasury bills is also an important indicator of the state of the economy, but it is not necessarily an instrument of monetary policy. The mortgage interest rate is determined by market forces and is not controlled by the Federal Reserve. The budget deficit is a fiscal policy tool, not a monetary policy tool.

Which of the Following Is an Instrument of Monetary Policy