Question

Other goals of Monetary Policy include _____.

		foreign exchange market stability
		low employment
		circumventing coupons

____ credit is the discount lending that plays the most important role in monetary policy.

		Seasonal
		Secondary
		Primary

1. The Fed by can decrease the money supply by _______.

   		buying loans
   		selling bonds
   		purchasing stocks
   		All of the above

Answer 1

(1): Other goals of Monetary Policy include foreign exchange market stability.

This is attained by preventing large changes in value of the domestic currency so that extreme movements in the value of domestic currency are stabilized.

(2): Primary credit is the discount lending that plays the most important role in monetary policy.

Under primary credit healthy banks are allowed to borrow their requirements at short term maturities from the primary credit facility.

(3): The Fed by can decrease the money supply by selling bonds.

This will reduce the liquidity in the market and this method is known as open market operations.