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Questions and Answers
Which monetary policy tool involves the Fed buying or selling bonds to the public?
Which monetary policy tool involves the Fed buying or selling bonds to the public?
- Open Market Operations (correct)
- Changing the Discount Rate
- Changing the Required Reserve Ratio
- Quantitative Easing
What happens to the money supply when the Fed buys bonds from the public?
What happens to the money supply when the Fed buys bonds from the public?
- It becomes unstable
- It increases (correct)
- It remains the same
- It decreases
Which of the following is a characteristic of Open Market Operations?
Which of the following is a characteristic of Open Market Operations?
- It sends a clear signal
- It has an uneven regional impact
- It is high maintenance for the Fed (correct)
- It is not precise
What is the effect of a decrease in the discount rate on the money supply?
What is the effect of a decrease in the discount rate on the money supply?
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What is the purpose of the Required Reserve Ratio (RRR)?
What is the purpose of the Required Reserve Ratio (RRR)?
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What is the monetary policy response to a recession?
What is the monetary policy response to a recession?
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