Question

. If the Fed wishes to conduct expansionary monetary policy, it should (select one) a. Increase required reserve ratio b. Decrease required reserve ratio c. Sell T-Bills. d. Decrease taxes.

Answer 1

If the Fed needs to conduct expansionary monetary policy, it must b) decrease the required reserve ratio.

Expansionary economic coverage works via increasing the cash supply faster than traditional or lowering short-time period interest charges. it's far enacted by way of vital banks and comes about thru open marketplace operations, reserve requirements, and setting interest costs.

The Federal Reserve has 3 expansionary financial policy methods: lowering interest rates, decreasing banks' reserve necessities, and shopping for authorities' securities.

Expansionary monetary policy is genuinely a policy that expands (will increase) the delivery of money, while contractionary economic policy contracts (decreases) the supply of a rustic's forex.

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