Which of the following is a tool of the Federal Reserve System?
A. Encouraging employment by lending money at a discounted rate to firms that are in danger of having to make layoffs.
B. Reducing the burden of household debt by capping credit card and other loan interest rates at reasonable levels
C. Buying or selling stocks of publicly traded corporations in order to stabilize the stock market
D. Buying or selling bonds in the open market in order to stimulate the economy during recessions and prevent inflation
Answer: D
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For the monopoly shown in the figure above, the economic profit is
A) $0. B) $10. C) $40. D) $100.
If a bank has excess reserves of $7,000 and demand deposit liabilities of $100,000, and if the reserve requirement is 15 percent, then the bank has actual reserves of
A) $17,000. B) $22,000. C) $27,000. D) $29,000.