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Zorluk: KolayMonetary Policy, Fiscal Policy, and Economic Tools

During an economic slowdown, the Federal Reserve seeks to increase liquidity in the banking system and encourage commercial lending. Which of the following monetary policy actions would the Federal Reserve take to accomplish this goal?

  1. Lowering the discount rate charged to commercial banksCevap
  2. B
    Decreasing corporate and individual federal income tax rates
  3. C
    Increasing federal government expenditures on public infrastructure projects
  4. D
    Increasing the legal reserve requirements for member banks

Cevap

Lowering the discount rate charged to commercial banks is an expansionary monetary policy action taken by the Federal Reserve.
Lowering the discount rate is a direct expansionary monetary policy tool utilized by the Federal Reserve. When the Fed cuts the discount rate, it lowers borrowing costs for member depository institutions, making it easier for banks to obtain liquidity and extend loans to consumers and businesses.

Adım Adım Çözüm

1
Identify the policy authority and objective in the stem.
The Federal Reserve (central bank) is seeking to implement an expansionary policy to stimulate the economy.
Monetary policy is controlled by the Federal Reserve, while fiscal policy is controlled by Congress.
2
Distinguish between Federal Reserve monetary tools and Congressional fiscal tools.
Tax rates and government spending are fiscal policy tools. Discount rates, open market operations, and reserve requirements are monetary policy tools.
Understanding institutional authority is key to eliminating fiscal options.
3
Determine which Federal Reserve tool expands credit and money supply.
Lowering the discount rate makes borrowing cheaper for banks, promoting lending and economic growth.
Lower borrowing costs incentivize credit expansion during economic slowdowns.

Anahtar Kavram

Expansionary Monetary Policy Tools of the Federal Reserve
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Konular

Monetary Policy, Fiscal Policy, and Economic Tools

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