The Main Tool That the Federal Reserve Uses to Conduct

question 235

Multiple Choice

The main tool that the Federal Reserve uses to conduct monetary policy is

• A)open market operations.
• B)discount policy.
• C)setting reserve requirements.
• D)acting as the lender of last resort.
• E)check clearing.

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Definitions:

Municipal Bond

A debt security issued by a state, municipality, or county to finance its capital expenditures.

Industrial-Development Bond

Tax-exempt bonds issued by municipal or county governments to finance the development of industrial or commercial facilities, intended to create jobs and promote economic growth.

Revenue Bond

A type of municipal bond supported by the revenue from a specific project, such as a toll road or a public utility, rather than general taxes.

Tax Bracket

Categories at set intervals of income that determine the rate at which income is taxed, with the principle that as income increases, it is taxed at a higher rate.