Question

The primary policy tool used by the Fed to meet its monetary policy goals after 2008...

The primary policy tool used by the Fed to meet its monetary policy goals after 2008 was:

Multiple Choice

  • changing the discount rate.

  • changing reserve requirements.

  • Adjusting the IOER, IORR and the Reverse Repo (RRP) rates.

  • changing bank regulations.

  • open market operations.

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Answer #1

The answer to the question is

3. Adjusting Ioer, iorr and reverse repo rate

This is because interest of excess reserves, interest on reserve required and reverse repo rate are all related to the rate rate of interest paid by Fed to the commercial banks on the reserves which they mantain with central bank. if the rate will br higher, less will be credit in the economy and vice versa

Other options are incorrect because they were not the primary tools used by the central bank

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