What is the most commonly used monetary policy tool?

5. What is the most commonly used monetary policy tool?

  1. Issuing of Notes
  2. Close Market Operations
  3. Discount Rate
  4. Open Market Operations

Answer: D) Open Market Operations

Explanation:

Open market operations (OMO) allude to the Federal Reserve (the Fed) practice of trading U.S. Depository protections, alongside different protections, on the open market to control the inventory of cash that is on hold in U.S. banks. The Fed buys Treasury protections to expand the stockpile of cash and offers them to decrease the inventory of cash.

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