Which of the following methods for influencing the federal funds rate is most commonly used by the Federal Reserve?
A) Changing the quantity of reserves supplied
B) Changing the reserve requirement
C) Changing the interest rate paid on reserves
D) All three of the above are equally common

Question

Quizplus · Accepted Answer

The Federal Reserve most commonly influences the federal funds rate by changing the quantity of reserves supplied through open market operations. This involves buying or selling government securities to adjust the amount of money in the banking system, which in turn affects the federal funds rate.

Which of the Following Methods for Influencing the Federal Funds