The Most Important Function of the Federal Reserve System Is

question 32

Multiple Choice

The most important function of the Federal Reserve System is carrying out ______ policy.

• A)fiscal
• B)tax
• C)monetary
• D)spending
• E)inflationary

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Definitions:

Emissions Tax

A tax imposed on the emission of pollutants, aimed at reducing environmental harm.

Optimal Tax

A tax system designed to achieve the best balance between efficiency and equity.

Marginal Social Benefit

The supplementary gain for society derived from the consumption of one extra unit of a good or service.

Marginal Social Cost

The cost to society of producing an additional unit of a good or service, including both private costs and any externalities.