The main tools that the Fed can use to alter the reserves of commercial banks are the required-reserve ratio and all of the following, except
A) exchange rates.
B) the discount rate.
C) interest on reserves.
D) open-market operations.

Question

Quizplus · Accepted Answer

The Fed does not directly control exchange rates, therefore it cannot use them as a tool to alter the reserves of commercial banks. However, it can adjust the required-reserve ratio, the discount rate, interest on reserves, and conduct open-market operations to influence the reserves of commercial banks.

The Main Tools That the Fed Can Use to Alter