Question

Which is not a policy tool used by the Fed?

Responses

setting the required reserve ratio

setting the required reserve ratio

setting the discount rate

setting the discount rate

buying and selling bonds

buying and selling bonds

making tax cuts

making tax cuts

Answer 1

The policy tool that is not used by the Federal Reserve (Fed) is **making tax cuts**. The Fed typically uses tools such as setting the required reserve ratio, setting the discount rate, and buying and selling bonds to influence monetary policy. Tax cuts, however, are a fiscal policy tool implemented by the government.