Question

The major tools of monetary policy available to the Federal Reserve System include: a the discount rate, margin regulations, and moral suasion. b tax collections, open-market operations and the discount rate. c open-market operations, margin regulations, and moral suasion. d reserve requirements, margin regulations, and moral suasion. e reserve requirements, open-market operations, and the discount rate.

Answer 1

reserve requirements, open-market operations, and the discount rate.

Step-by-step explanation:

Monetary policies are tools that a monetary authority uses to regulate cash flow within a society. It does this to maintain the the economy by avoiding scarcity or surplus money in circulation.

The tools used include open market operations, discount rate, and reserve requirements.

Open market operations involves buying and sale of securities. When there is excess cash in circulation, securities are sold to mop up cash and vice versa.

Discount rate is the rate that monetary authorities impose on banks for short term. When there is excess cash discount rate is increased to discourage banks from giving loans.

Reserve requirement is the minimum amount that a bank is required to deposit with the monetary authority. This is used to control amount of cash available to banks for loans.