Which of the following is NOT a policy tool of the Federal Reserve System?

Question

Quizplus · Accepted Answer

The tax rate imposed on interest income is a policy tool of the government, not the Federal Reserve System. The other options are indeed policy tools of the Fed:

A) Open market operations involve the buying and selling of government securities to affect the money supply and interest rates.

C) The interest rate charged by the Fed for loans to member banks (known as the discount rate) impacts the cost of borrowing for banks and can influence their lending practices.

D) The amount of required reserves held by member banks affects their ability to lend out money and therefore impacts the money supply in the economy.

Which of the Following Is NOT a Policy Tool of the Federal