Which Tool of Monetary Policy Does the Federal Reserve Use

question 43

Multiple Choice

Which tool of monetary policy does the Federal Reserve use most often?

• A)term auctions
• B)open-market operations
• C)changes in reserve requirements
• D)changes in the discount rate

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Definitions:

International Trade Agreements

Treaties between two or more nations that outline the rules and regulations for trade between them, facilitating smoother and increased trade.

Monetary Unions

Monetary unions are agreements between two or more states to share a common currency and monetary policy, aimed at facilitating economic stability and integration, such as the European Monetary Union.

Currency Exchange Rate

The price of one country’s currency in terms of another country’s currency.

Purchasing Power

The value of a currency expressed in terms of the amount of goods or services that one unit of money can buy.