SIE Exam Question 218: Answer and Explanation

Question: 218

The Federal Reserve acts to guide and control the monetary policy of the country. Which of the following are actions it might take to do that?

• A. Alter the level of money that is circulated.
• B. Actively participate in open market transactions involving US government securities.
• C. Publicly communicate its views regarding the economy.
• D. All of the above actions will work.

Correct Answer: D

Explanation:

The Federal Reserve may alter the level of money in circulation, actively transact in US government securities in the open market, and publicly share its views on the economy and the direction it sees it taking.