What Tool of Monetary Policy Would the Fed Most Likely

question 179

Multiple Choice

What tool of monetary policy would the Fed most likely use to increase the federal funds rate from 1 percent to 1.25 percent?

• A)Open-market operations
• B)The discount rate
• C)A change in reserve requirements
• D)Margin requirements

---

Definitions:

Behavioral Economics

A field of economic research that examines psychological, cognitive, emotional, cultural, and social factors on economic decisions.

Loss Aversion

A principle in behavioral economics stating that individuals tend to prefer avoiding losses to acquiring equivalent gains.

Price Increase

A rise in the cost of goods or services over time, often measured as a percentage.

Quality Reduction

A decrease in the standard or grade of products or services, often as a cost-saving measure by producers.