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:

Acquisition Transaction

A business operation in which one company purchases most or all of another company's shares to assume control.

Investment

The allocation of resources (such as capital, time, or effort) in the expectation of receiving future benefits or returns.

Credit Balance

The amount of money in a financial repository that surpasses the debit balance and is available for use.

Consolidated Goodwill

The excess value of purchase price over the fair market value of identifiable assets and liabilities acquired during consolidation.