The Federal Reserve's most important tool for controlling the amount of reserves in the banking system is

Question

Quizplus · Accepted Answer

Open market operations refer to the buying and selling of government securities by the Federal Reserve in order to influence the supply of reserves in the banking system. By buying securities, the Fed injects reserves into the system, while selling securities removes reserves. This is the most commonly used tool by the Fed to control the amount of reserves in the banking system.

The Federal Reserve's Most Important Tool for Controlling the Amount