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What are the 3 tools of monetary policy?
The first tool of monetary policy is open market operations, which involved the buying and selling of government securities.
The second monetary policy tool is the discount rate. The discount rate is the interest rate charged by Federal Reserve Banks to depository institutions on short-term loans
The third tool of monetary policy is reserve requirements. Reserve requirements are the portions of deposits that banks must maintain either in their vaults or on deposit at a Federal Reserve Bank.
The federal reserve and FOMC use these tools to regulate and project the outcome of the economy
Thanks so much, random island animals! Now I understand the 3 tools of monetary policy.
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