The Fed's most powerful instrument is its authority to conduct ________, which means that the Fed may buy and sell, in open debt markets, government securities for its own account.

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The Fed's most powerful instrument is its authority to conduct open market operations, which involves buying and selling government securities in open debt markets for its own account. This allows the Fed to directly influence the money supply and interest rates in the economy. Reserve requirements and the discount rate are also tools that the Fed can use to impact the money supply and interest rates, but they are not as powerful or flexible as open market operations. Open market repurchase agreements are a type of open market operation where the Fed buys securities with a commitment to sell them back to the seller at a later date, but this is not the Fed's most powerful instrument.

The Fed's Most Powerful Instrument Is Its Authority to Conduct