What is the main policy tool available to the Federal Reserve?
A)reserve rate
B)discount rate
C)federal funds rate
D)printing money
E)mortgage rate

Question

Quizplus · Accepted Answer

The main policy tool available to the Federal Reserve is the federal funds rate, which is the interest rate at which banks lend to each other overnight. By changing the federal funds rate, the Fed can influence overall interest rates in the economy, controlling the cost of borrowing for households and businesses and ultimately affecting the level of economic activity. The reserve rate and discount rate are other tools the Fed uses to manage the money supply, while printing money would lead to inflation and is a less common policy tool. The mortgage rate is determined by the market and is not directly controlled by the Fed.

What Is the Main Policy Tool Available to the Federal