The tool most frequently relied on by the Fed is
A)interest rate changes.
B)changing the money multiplier.
C)changing the discount rate.
D)open-market operations.
E)changing the reserve ratio.

Question

Quizplus · Accepted Answer

The tool most frequently relied on by the Fed is open-market operations, which involves buying and selling government securities to influence the level of reserves in the banking system and ultimately affect the interest rates that banks charge one another. While the other tools listed are also used by the Fed, they are typically employed less frequently or in more specific circumstances.

The Tool Most Frequently Relied on by the Fed Is