Which of the following policy tools will have the greatest effect on bank reserves?

Question

Quizplus · Accepted Answer

Buying U.S. government securities is a tool of open market operations, which involves the Federal Reserve buying or selling government securities in the open market to affect the level of bank reserves. When the Fed buys securities, it injects money into the banking system, increasing bank reserves. Therefore, buying U.S. government securities will have the greatest effect on bank reserves among the given policy tools.

Which of the Following Policy Tools Will Have the Greatest