6 Questions
Which monetary policy tool involves the Fed buying or selling bonds to the public?
Open Market Operations
What happens to the money supply when the Fed buys bonds from the public?
It increases
Which of the following is a characteristic of Open Market Operations?
It is high maintenance for the Fed
What is the effect of a decrease in the discount rate on the money supply?
It increases
What is the purpose of the Required Reserve Ratio (RRR)?
To regulate the money supply
What is the monetary policy response to a recession?
Easy money
Learn about the Federal Reserve's role in regulating the money supply through monetary policy, including the three tools: open market operations, reserve requirements, and discount rates. Understand the advantages and disadvantages of each tool.
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