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

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

Quizplus · Accepted Answer

Open market operations involve the buying and selling of government securities by the Fed, which directly affects the amount of reserves and the money supply in the banking system. This is considered the strongest control because it is a direct and targeted way for the Fed to influence the money supply. Interest rate changes, the discount rate, and the required reserve rate are also tools used by the Fed to impact the money supply, but they are not as directly tied to the supply of money in circulation as open market operations.

The Fed Has Which of the Following as Its Strongest