The Least Used Monetary Policy Instrument Used by the Fed

question 23

Multiple Choice

The least used monetary policy instrument used by the Fed is

• A)open market operations
• B)changing the discount rate
• C)changing the reserve requirement
• D)none of the above

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Definitions:

Adverse Selection

A situation where sellers have information that buyers do not, or vice versa, leading to transactions that benefit the more informed party.

Death Spiral

A term often used in insurance and pricing strategies to describe a situation where pricing adjustments lead to reduced participation or purchase, necessitating further price increases, and thus accelerating a decline in demand or viability.

Health Insurance

A type of insurance coverage that pays for medical and surgical expenses incurred by the insured as a part of a health care system.

Premiums

Payments made regularly to an insurance company or the additional amount above the normal price.