The most commonly used tool by the Federal Reserve to control the monetary base is

Question

Quizplus · Accepted Answer

Open market operations involve the buying and selling of government securities by the Federal Reserve to influence the monetary base. By buying securities, the Federal Reserve increases the monetary base, while selling securities decreases the monetary base. This tool is the most commonly used method by the Federal Reserve to control the monetary base. Changes in the discount rate and legal reserve ratios can also affect the monetary base, but they are used less frequently compared to open market operations. Tax rates on commercial banks do not directly affect the monetary base.

The Most Commonly Used Tool by the Federal Reserve to Control