The Four Main Policy Tools the Federal Reserve System Uses

question 269

Multiple Choice

The four main policy tools the Federal Reserve System uses to influence the interest rate are setting

• A)the prime rate,open market operations,extraordinary crisis management and setting the excess reserve ratio.
• B)quantitative easing,market interest rate and the discount rate,as well as open market operations.
• C)the discount rate,open market operations,extraordinary crisis measures and setting the required reserve ratio.
• D)credit easing,the discount rate,setting tax rates,and setting the required reserve ratio.
• E)quantitative easing,open market operations,setting tax rates,and setting the required reserve ratio.

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Definitions:

Negative Reinforcement

Withdrawal of an aversive experience, which serves as a rewarding consequence of a behavior. For example, rewarding your dog for sitting on command by removing a restraining muzzle.

TV Privileges

The allowance or permission granted to someone, especially children, to watch television, often used as a reward or incentive.

Compliance

The act of conforming, submitting, or adapting one's behavior to align with the rules, demands, or expectations of others.

Self-Control

The ability to regulate one's emotions, thoughts, and behaviors in the face of temptations and impulses.