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What policy instruments does the Fed use for the monetary policy? What are the pros and cons...

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Economics

What policy instruments does the Fed use for themonetary policy?


What are the pros and cons of using expansionary andcontractionary monetary policy tools under the following scenarios:depression, recession, inflation, and robust economic growth? Whichdo you think is more appropriate today?


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4.4 Ratings (724 Votes)
The Fed can use three tools to achieve its monetary policy goals the discount rate reserve requirements open market operations and interest on reserves During a recession or deflation central banks use contractionary monetary policy as central banks decrease the money supply through monetary policy and this can    See Answer
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