The Fed's Most Important and Most Frequently Used Tool of Monetary

question 131

Multiple Choice

The Fed's most important and most frequently used tool of monetary policy is

• A) moral suasion.
• B) open-market operations.
• C) changes in the discount rate.
• D) changes in required reserve ratios.

---

Definitions:

Negotiable

Capable of being transferred or modified through discussion or upon reaching an agreement.

Oral Promise

An oral promise is a commitment or assurance given verbally rather than in written form, which may or may not be legally enforceable depending on the context.

Negotiable

A characteristic of a financial instrument (like a check or bill of lading) that allows it to be transferred from one party to another as a form of payment or investment.

Contract Formation

The process by which parties agree to terms that are legally binding and enforceable.