Which of the following are tools that are employed by the Federal Reserve in its efforts to control the money supply?

By Peter Cherewyk AAA
A:

I. Moral suasion
II. Changing the discount rate
III. Changing the reserve requirement
IV. Changing the prime interest rate

A. I, II, III, IV

B. II, III, IV

C. I, III

D. I, II, III






The tools of the Federal Reserve include all the above except changing the prime interest rate. The prime interest rate is set by banks. To be sure, the practices and policies of the Fed affect the prime, but the Fed does not set that rate. The Fed also employs the operations of the FOMC, and Regulation "T" in its efforts. For more help see moral suasion, and our Series 7 Exam Prep.

Correct answer: d. I, II, III




RELATED FAQS

  1. What is the difference between GDP and GDP accounting for PPP (purchasing power parity)?

    Learn how to distinguish between absolute GDP and GDP after accounting for purchasing power parity, or PPP, when comparing ...
  2. Is real GDP a better index of economic performance than GDP?

    Learn why real GDP is a better index for expressing the output of an economy, as it takes into account the factors that distort ...
  3. When do economists use real GDP instead of GDP?

    Learn about the purposes for which economists rely on real GDP. Find out how real GDP is calculated and how it is important ...
  4. Which United States Presidents have run the largest budget deficits?

    Take a look at which presidents were in office for the largest budget deficits in U.S. history and how the responsibility ...
RELATED TERMS
  1. NEXUS

    A Trusted Traveler Program that allows pre-screened U.S. and ...
  2. Global Entry

    A U.S. program giving pre-approved travelers a faster Customs ...
  3. SENTRI

    This U.S. program grants pre-approved travelers access to a faster ...
  4. Separation Of Powers

    An organizational structure in which responsibilities, authorities, ...
  5. Nordic Model

    The social welfare and economic systems adopted by Nordic countries.
  6. Administrative Order On Consent (AOC)

    An agreement between an individual or business and a regulatory ...

You May Also Like

Related Articles
  1. Stock Analysis

    A New Economic Threat: State-Sponsored ...

  2. Investing

    What Has Been Groupon’s Growth Strategy?

  3. Economics

    A Ban On SWIFT Could Hit Russia Where ...

  4. Trading Strategies

    Consider The Season On Trading Day

  5. Economics

    The Economic Impact of Better US-Cuba ...

Trading Center