Question

Which tool would the Federal Reserve use as part of an expansionary
monetary policy?
A. Raising the interest rate for bank reserves
B. Selling treasury securities on the open market
C. Raising the reserve requirement on banks
D. Lowering the discount rate for short-term loans

Answer 1

lowering reserve requirementsAnswer:

Explanation:

just took quiz and got “raising interest rate for bank reserves” wrong.

Answer 2

The tool that federal reserves use as a part of the expansionary monetary policy is the lowering of the reserve requirements and thereby giving discounted rates.

What are federal reserves?

The Federal Reserve is a central banking system of the USA and was started in Dec 1913, the enactment of the Federal Reserve took place a series of financial panics.

This led to central control over the money system. The federal system is made of several layers and is governed by the presidently appointed board.

Find out more information about the Federal Reserve.

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