The Federal Reserve carries out monetary policy by:
A) ordering government spending to be increased or decreased.
B) giving money to needy persons and businesses.
C) changing the amount of excess reserves in the banking system.
D) changing the tax rate on interest income.

Question

Quizplus · Accepted Answer

The Federal Reserve influences the economy by managing the federal funds rate and adjusting the amount of money banks must hold in reserve, thereby changing the amount of excess reserves in the banking system. This affects lending, interest rates, and overall economic activity.

The Federal Reserve Carries Out Monetary Policy By