Which tool does the Fed use most commonly to control the money supply?
A) changing the discount rate
B) changing the reserve requirement
C) open market operations
D) none of the above

Question

Quizplus · Accepted Answer

Open market operations are the most commonly used tool by the Federal Reserve to control the money supply. This involves the buying and selling of government securities in the open market to influence the level of reserves in the banking system, which in turn affects interest rates and the amount of money in circulation.

Which Tool Does the Fed Use Most Commonly to Control