The Federal Reserve can use four tools to achieve its monetary policy goals: the discount rate, reserve
requirements, open market operations, and interest on reserves. All four affect the amount of funds in the
banking system
Which of the following describes discount rate?
A
The interest rate Reserve Banks charge commercial banks for short-term loans.
B
The portions of deposits that banks must hold in cash, either in their vaults or on deposit at a
Reserve Bank
с
The Federal Reserve Bank of New York buying and selling U.S. government securities.
D
The newest and most frequently used tool given to the Federal Reserve by Congress after the
Financial Crisis of 2007-2009.