The least used monetary policy instrument used by the Fed is
A) open market operations
B) changing the discount rate
C) changing the reserve requirement
D) issuing treasury bills

Question

Quizplus · Accepted Answer

Changing the reserve requirement is the least used monetary policy instrument by the Fed because it can significantly impact the amount of funds banks have available to lend, leading to potentially large adjustments in the banking sector and the broader economy. Adjusting the reserve requirement is less frequent and more disruptive compared to other tools like open market operations or changing the discount rate. Issuing Treasury bills is not a direct tool of the Fed but rather the U.S. Treasury's method for funding government expenditures.

The Least Used Monetary Policy Instrument Used by the Fed