Asked by Diana Imangeldieva on Apr 29, 2024
Verified
Which of the following is not an example of monetary policy?
A) The Federal Open Market Committee decides to sell bonds.
B) The Federal Open Market Committee decides to buy bonds.
C) The Federal Reserve reduces the reserve requirement.
D) The Federal Reserve facilitates bank transactions by clearing checks.
Monetary Policy
Actions undertaken by a central bank, such as the Federal Reserve, to control the money supply and interest rates to achieve macroeconomic objectives like controlling inflation, consumption, growth, and liquidity.
Federal Open Market Committee
The branch of the Federal Reserve System responsible for setting national monetary policy and interest rates.
Reserve Requirement
The minimum amount of deposits that a bank must hold in reserve and not lend out, which is set by the central bank as a means to control the money supply.
- Elucidate the notion of monetary policy and how it influences money circulation.
Verified Answer
BN
Brian NavarreteApr 30, 2024
Final Answer :
D
Explanation :
Monetary policy involves managing the supply of money and interest rates by central banks. Choices A, B, and C are direct actions affecting the money supply and interest rates, thus are examples of monetary policy. Choice D, facilitating bank transactions by clearing checks, is a function of the Federal Reserve but does not directly influence the money supply or interest rates, making it not an example of monetary policy.
Learning Objectives
- Elucidate the notion of monetary policy and how it influences money circulation.