The Basic Policy Instruments That the Fed Uses to Execute

question 25

Multiple Choice

The basic policy instruments that the Fed uses to execute monetary policy include all of the following EXCEPT

• A)changing reserve requirements
• B)changing the discount rate
• C)conducting open market operations
• D)all of the above are monetary policy instruments

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Definitions:

Monopoly

A monopoly is a market structure characterized by a single seller dominating the market, facing no competition, which can influence prices and control the supply of goods or services.

Monopolistic Competition

is a market structure characterized by many firms selling products that are similar but not identical, allowing for competition based on quality, price, and marketing.

Quantity of Output

The total amount of goods or services produced by a company or an economy in a given period.

Monopolistically Competitive Firm

A firm in a monopolistic competition operates in a market structure where many companies sell products that are similar but not identical, allowing for some degree of market power.