Federal Reserve policy tools include all of the following EXCEPT
A) open market operations.
B) required reserve ratios.
C) desired reserve ratios.
D) the discount rate.

Question

Quizplus · Accepted Answer

The Federal Reserve does not use "desired reserve ratios" as a policy tool. Required reserve ratios (B) refer to the percentage of deposits that banks must hold in reserve and open market operations (A) refer to the buying and selling of government securities to influence the money supply. The discount rate (D) refers to the interest rate at which banks can borrow funds from the Fed.

Federal Reserve Policy Tools Include All of the Following EXCEPT