The major tools of monetary policy available to the Federal Reserve System include:

Question

Quizplus · Accepted Answer

Reserve requirements refer to the amount of money that banks are required to hold in reserves, margin regulations refer to regulations on borrowing securities to buy assets, and moral suasion refers to the persuasion of banks to act in a certain way without any actual regulation or enforcement. The three tools mentioned in choice B are the main tools of monetary policy used by the Federal Reserve System. Reserve requirements control the amount of money banks can lend out, open-market operations involve buying and selling government securities to control the money supply, and the discount rate is the interest rate at which banks can borrow money from the Federal Reserve.

The Major Tools of Monetary Policy Available to the Federal