The Federal Reserve rarely uses control of _____ to implement monetary policy.
A) the discount rate
B) the reserve requirement
C) open market operations
D) the federal funds rate

Question

Quizplus · Accepted Answer

The reserve requirement is rarely used by the Federal Reserve to implement monetary policy, as it is seen as too drastic and can have unintended consequences on banks and the overall economy. The Federal Reserve prefers to use open market operations and adjustments to the federal funds rate as the primary tools for implementing monetary policy. The discount rate is also a tool used by the Federal Reserve, but it is not as frequently used as open market operations and adjustments to the federal funds rate.

The Federal Reserve Rarely Uses Control of _____ to Implement