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:

Cartel

A formal agreement among competing firms to control prices or exclude entry of a new competitor in the market.

Market Price

The current price at which an asset or service can be bought or sold in a particular market.

Substitutes

Products or services that can be used in place of each other, having a positive cross-price elasticity of demand.

Market Extent

Refers to the geographical or demographic reach of a market, influencing the potential customer base and the scope of economic activities.