The Fed influences the interest rate by using which of the following tools?
i. open market operations
ii. taxes on bank accounts
iii. changes in required reserve ratios
A) i only B) ii only C) iii only D) Both i and iii E) i, ii and iii
Question 2
In the money market, in the short run in order to decrease the nominal interest rate, the Fed must
A) increase the discount rate.
B) increase the quantity of money.
C) decrease the quantity of money.
D) decrease the demand for money.
E) directly lower the interest rate and not change either the demand for money or the supply of money.
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