Question

​Which of the following policies is NOT in the Fed's monetary toolbox?

-a.
​Increasing the quantity of reserves
b.
​Issuing a bank run
c.
​Buying government bonds
d.
​Lending reserves to banks

Answer 1

The policy NOT in the Fed's monetary toolbox is issuing a bank run. A bank run (run on the bank) happens when a large number of people withdraw their money from a bank simultaneously, because they believe the bank may cease to function in the near future.