The Federal Reserve's major tools to control the money supply are I. open market operations. II. discount rate lending and the term auction facility. III. required reserve ratio and payment of interest on reserves. IV. federal funds lending.
A) I and II only
B) III and IV only
C) I, II, and III only
D) I, II, III, and IV

Question

Quizplus · Accepted Answer

The Federal Reserve's major tools to control the money supply are open market operations (I), discount rate lending and the term auction facility (II), and required reserve ratio and payment of interest on reserves (III). Federal funds lending (IV) is a method used by banks to borrow from each other and is not a tool directly used by the Federal Reserve to control the money supply.

The Federal Reserve's Major Tools to Control the Money Supply