Asked by ethan battista on Jun 11, 2024

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The reserve requirement,open market operations,and the discount rate are all tools used by the Fed to

A) protect the savings of bank depositors.
B) manipulate the dollar price of gold.
C) ensure that a dollar is worth as much in Kansas City as in Denver.
D) enact monetary policy.
E) enact fiscal policy.

Reserve Requirement

The minimum amount of reserves that banks are required to hold by law, usually a percentage of their deposits, to ensure bank liquidity.

Open Market Operations

Central bank activities involving the buying and selling of government securities to control the money supply and interest rates.

Discount Rate

The fee in terms of interest that depository institutions and commercial banks pay for loans taken from the lending establishment of their regional Federal Reserve Bank.

  • Comprehend the role and tools of the Federal Reserve in managing monetary policy.
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JC
Joseph ChongJun 12, 2024
Final Answer :
D
Explanation :
The reserve requirement, open market operations, and the discount rate are all tools used by the Federal Reserve (Fed) to enact monetary policy. These tools are used to influence the money supply and interest rates in an effort to stabilize the economy, control inflation, and achieve other macroeconomic goals. These tools do not directly protect bank depositors, manipulate the dollar price of gold, or ensure that the value of one dollar is the same in different cities. The Fed is primarily responsible for monetary policy, while fiscal policy is the responsibility of Congress and the President.