The Fed's policy tools include
A)required reserve ratios,the discount rate,open market operations,and extraordinary crisis measures.
B)holding deposits for the U.S.government,reserve requirements,and the discount rate.
C)setting regulations for lending standards and extraordinary crisis measures.
D)supervision of the banking system and buying and selling commercial banks.
E)required reserve ratios,income tax rates,and open market operations.

Question

Quizplus · Accepted Answer

Required reserve ratios, the discount rate, open market operations, and extraordinary crisis measures are all tools that the Federal Reserve (the Fed) can use to implement monetary policy. Holding deposits for the U.S. government and setting regulations for lending standards are not considered policy tools of the Fed. The supervision of the banking system and buying and selling commercial banks are actions undertaken by the Fed, but they are not policy tools. Income tax rates are a responsibility of the government, not the Fed.

The Fed's Policy Tools Include