The primary tool utilized by the Federal Reserve today in conducting monetary policy is
a. the discount rate.
b. reserve requirements.
c. open market operations.
d. selective credit controls.
C
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Describe the structure of the Fed's Open Market Committee (FOMC). What is this committee's primary responsibility?
What will be an ideal response?
The collapse of the subprime mortgage market
A) did not affect the corporate bond market. B) increased the perceived riskiness of Treasury securities. C) reduced the Baa-Aaa spread. D) increased the Baa-Aaa spread.
Suppose Ethan and Ava work in a farm that grows apples and oranges of the same size. In one hour, Ethan can pick 8 pounds of apples or 1 pound of oranges. Ava can pick 6 pounds of apples or 1 pound of oranges. It can be concluded that
A) Ava has a comparative advantage in picking apples. B) Ava has an absolute advantage in picking apples. C) Ethan has a comparative advantage in picking apples. D) Ethan has an absolute advantage in picking oranges.
Tony Lai deposits $200 in currency in his checking account at a bank. This deposit is treated as:
A. a subtraction of $200 from the money supply because the $200 in currency is no longer in circulation. B. no change in the money supply because the $200 in currency has been converted to a $200 increase in checkable deposits. C. an addition of $200 to the money supply because the bank holds $200 in currency and the checking account has been increased by $200. D. an addition of $200 to the money supply because of the creation of a checkable deposit of $200.