The Most Used Tool of the Fed Is

question 15

Multiple Choice

The most used tool of the Fed is:

• A) open market operations.
• B) the reserve requirement.
• C) the discount window.
• D) These are all used with equal frequency.

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Definitions:

Forbearance

The act of refraining from exercising a legal right; an agreement between a lender and a borrower in which the lender agrees to temporarily cease requiring mortgage payments, to delay foreclosure, or to accept smaller payments than previously scheduled.

Discount

A reduction from the usual cost of something, often applied to encourage buyers.

Preexisting Duty

An obligation that one is already legally bound to perform, which cannot serve as consideration for a new contract.

Extortion

The act of obtaining something, especially money, through force or threats.