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Which of the following is NOT an example of monetary policy? a. The Federal Reserve reduces...

Which of the following is NOT an example of monetary policy? a. The Federal Reserve reduces the reserve requirements. b. The Federal Open Market Committee decides to sell bonds. c. The Federal Reserve facilitates bank transactions by clearing checks. d. The Federal Open Market Committee decides to buy bonds.

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Answer #1

Option C is not an example of monetary policy

Monetary policy is the discretionary policy by the central bank of a nation that influences the money supply and interest rate in the economy. The major tools include reserve requirements and open market sale and purchase of government bonds. When the Federal Reserve facilitates transactions by clearing cheques it will not influence the money supply and therefore cannot be considered as a tool of monetary policy.

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