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Zorluk: Çok zorMonetary Policy, Fiscal Policy, and Economic Tools

During an economic environment characterized by persistent inflationary pressure alongside stagnant macroeconomic growth, policy planners are evaluating contractionary measures to tighten money supply. Which of the following actions represents a monetary policy tool controlled exclusively by the Federal Reserve, rather than a fiscal policy measure enacted by Congress?

  1. Increasing the interest rate paid on reserve balances (IORB) to incentivize depository institutions to hold excess reserves rather than expanding credit.Cevap
  2. B
    Increasing federal corporate tax rates to lower disposable corporate income and curb private sector capital expenditures.
  3. C
    Reducing Congressional appropriations for federal infrastructure projects to decrease aggregate economic demand.
  4. D
    Lowering the prime rate charged by commercial banks to reduce the overall borrowing cost for corporate consumers.

Cevap

Increasing the interest rate paid on reserve balances (IORB) to incentivize depository institutions to hold excess reserves rather than expanding credit.
The interest rate paid on reserve balances (IORB) is an official monetary policy tool administered directly by the Federal Reserve Board of Governors. When the Fed raises the IORB rate, commercial banks are incentivized to deposit funds at the Federal Reserve to earn a higher guaranteed return rather than lending to businesses and consumers. This contracts credit availability, reduces money supply growth, and puts upward pressure on short-term interest rates.

Adım Adım Çözüm

1
Distinguish monetary policy from fiscal policy authorities.
Monetary policy is controlled by the Federal Reserve System (the Fed), while fiscal policy involves taxation and government spending enacted by Congress and the President.
The question specifically asks for a tool controlled exclusively by the Federal Reserve.
2
Evaluate Federal Reserve monetary tools designed to contract the money supply.
The Fed uses tools such as Open Market Operations (OMOs), the discount rate, reserve requirements, and administered rates like IORB (Interest on Reserve Balances) and overnight reverse repurchase agreements (ON RRP).
Raising the IORB rate increases the risk-free return banks earn by keeping reserves at the Fed, which drives up broader short-term market rates and curtails commercial lending.
3
Eliminate choices controlled by Congress or commercial market forces.
Corporate taxation and infrastructure spending are fiscal actions controlled by Congress. The prime rate is set by individual commercial banks.
Only IORB represents an active, central bank monetary policy instrument.

Anahtar Kavram

Distinction between Federal Reserve Monetary Policy Tools and Congressional Fiscal Policy Tools
Tahmini Süre:1m 30s
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Konular

Monetary Policy, Fiscal Policy, and Economic Tools

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