monetary policy

Front

What is the central bank in the USA that regulates the monetary system?

Back

The FED (Federal Reserve System)

Front

What are the main tools of Monetary Policy?

Back

Open Market Operations (OMO), Reserve Requirement, Discount Rate, Interest on reserves

Front

Which of the following is NOT a monetary policy tool?

Back

Balance Accounts

Front

What happens to the money supply when the central bank sells bonds?

Back

The money supply decreases.

Front

Which type of monetary policy would help fight unemployment?

Back

Expansionary monetary policy.

Front

What is the purpose of Open Market Operations (OMO)?

Back

To control the money supply and influence interest rates.

Front

How does the Reserve Requirement affect the money supply?

Back

Increasing the reserve requirement decreases the money supply, while decreasing it increases the money supply.

Front

What is the Discount Rate?

Back

The interest rate charged by central banks on loans to commercial banks.

Front

What is the effect of lowering the Discount Rate?

Back

It encourages banks to borrow more, increasing the money supply.

Front

What is an example of an expansionary monetary policy action?

Back

Buying government securities in the open market.