The Four Main Tools of Monetary Policy Are

question 256

Multiple Choice

The four main tools of monetary policy are

• A) tax-rate changes, the discount rate, open-market operations, and the federal funds rate.
• B) tax-rate changes, changes in government expenditures, open-market operations, and interest on excess reserves.
• C) the discount rate, the reserve ratio, interest on excess reserves, and open-market operations.
• D) changes in government expenditures, the reserve ratio, the federal funds rate, and the discount rate.

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Definitions:

National Government

The organization responsible for governance and administration of a nation, typically composed of executive, legislative, and judicial branches.

Exchange Rate

The value of one currency for the purpose of conversion to another, determining how much one currency is worth in terms of another.

Purchasing Power

Refers to the financial ability of an individual or group to buy goods and services, often influenced by income levels and inflation rates.

Currency Ratio

The value of one currency expressed in terms of another, used to determine how much of one currency can be exchanged for another.