Among the options provided, c) the federal reserve buys bonds in the open market is an example of monetary policy. This process is part of the Federal Reserve’s strategy to control the money supply and influence interest rates in the economy.
Monetary policy encompasses actions that central banks take to manage the money supply and interest rates. When the Federal Reserve buys bonds, it injects liquidity into the banking system, which can lower interest rates and encourage lending and investment. This is a key tool used to promote economic stability and growth.
In contrast, the other options pertain more to fiscal policy, which involves government spending and taxation decisions. For example, cutting taxes (option a) or adjusting government spending (option d) falls under fiscal policy measures, while the issuance of bonds by the U.S. Treasury (option b) is a means of financing the government’s fiscal activities.