Which of the following is an instrument of monetary policy?
A)The interest rate on 3-month Treasury bills
B)The mortgage interest rate
C)The discount rate
D)The budget deficit

Question

Quizplus · Accepted Answer

The discount rate is the interest rate at which banks can borrow funds from the central bank (in the US, the Federal Reserve). By changing the discount rate, the central bank can influence the interest rates that banks charge on loans to consumers and businesses, thus affecting overall economic activity. The other choices (A, B, D) are not directly controlled by the central bank and are not instruments of monetary policy.

Which of the Following Is an Instrument of Monetary Policy