The Fed has which of the following as its strongest control over the money supply?
A)Interest rate changes
B)The discount rate
C)Open-market operations
D)The required reserve rate

Question

Quizplus · Accepted Answer

Open-market operations refer to the buying and selling of government securities by the Federal Reserve. When the Fed buys securities, it injects money into the economy, increasing the money supply. When the Fed sells securities, it takes money out of the economy, decreasing the money supply. This is the strongest control the Fed has over the money supply because it directly affects the amount of money available in the economy. Interest rate changes, the discount rate, and the required reserve rate also influence the money supply, but to a lesser extent than open-market operations.

The Fed Has Which of the Following as Its Strongest