The Fed uses ________ to regulate the money supply.

Question

Quizplus · Accepted Answer

The Fed uses the discount rate to regulate the money supply. When the Fed lowers the discount rate, it makes it cheaper for banks to borrow money, which increases the money supply. When the Fed raises the discount rate, it makes it more expensive for banks to borrow money, which decreases the money supply. The other choices - stock market investments, deposit requirements, and the political negotiation process - can impact the economy, but they are not directly used by the Fed to regulate the money supply.

The Fed Uses ________ to Regulate the Money Supply