Which of the following is considered to be one of the Fed's normal monetary policy tools?
A) making loans to firms outside the banking industry
B) lowering the federal funds rate
C) buying mortgage-backed securities
D) dramatically increasing the monetary base

Question

Quizplus · Accepted Answer

Lowering the federal funds rate is one of the Fed's normal monetary policy tools, as it influences the interest rates that banks charge each other for short-term loans and thus can affect the overall level of lending and borrowing in the economy. The other options listed may be used as unconventional or emergency measures, but they are not considered part of the Fed's regular toolkit.

Which of the Following Is Considered to Be One of the Fed's