Which of the Following Tools of Monetary Policy Is Used

question 274

Multiple Choice

Which of the following tools of monetary policy is used least often?

• A)open market operations
• B)setting the required reserve ratio
• C)setting the discount rate
• D)acting as a lender of last resort

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Definitions:

Stable Equilibrium

A state in which a system, once disturbed, returns to its original condition because the equilibrium is stable.

Expected and Required Returns

The returns that investors anticipate or demand from an investment considering its risk, often guiding investment decisions.

SML

Stands for Security Market Line; it represents the relationship between the expected return of an investment and its risk in the capital asset pricing model (CAPM).

Beta of the Portfolio

An assessment of a portfolio's volatility or inherent risk, relative to the overall market.