Practice Quiz

FINRA Series 6

Category - Series 6

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Which of the following are fiscal policy tools under the jurisdiction of the U.S. Congress?
  1. the decision on the amount of cash reserves that a bank must hold
  2. the decision on whether to raise or lower effective tax rates
  3. the decision on whether to raise or lower the rate at which banks can borrow money from the Federal Reserve.
  4. Both A and B are fiscal policy tools.
Explanation
Answer: B - The decision on whether to raise or lower effective tax rates is a fiscal policy tool under the jurisdiction of the U.S. Congress. The decision on the amount of cash reserves a bank must hold (the reserve requirement) and the decision on whether to raise or lower the rate at which banks can borrow money from the Federal Reserve (the discount rate) are monetary policy tools under the jurisdiction of the Federal Reserve.
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