SIE Knowledge of Capital Markets Question 7: Answer and Explanation

Question: 7

Which of the following is a method by which the Federal Reserve implements monetary policy?

• A. Using open market activities
• B. Enforcing securities laws
• C. Lobbying Congress
• D. Nominating judicial candidates

Correct Answer: A

Explanation:

A: Using open market activities is a method by which the Federal Reserve implements monetary policy. Choice B is a function of the Department of the Treasury, Securities Exchange Commission, the states and territories, and some self-regulatory organizations, but not the Federal Reserve. Choice C is not a method of implementing monetary policy. Choice D is a function of the president, not the Federal Reserve.