The primary tool the Fed uses to control the money supply today is _____

Question

Quizplus · Accepted Answer

Open-market operations involve the buying and selling of government securities by the Fed in order to influence the supply of money in the economy. This is the primary tool the Fed currently uses to control the money supply. The discount rate and required reserve ratio are also important tools but are less commonly used. Chartering is the process by which a bank is formally recognized by the government and does not directly affect the money supply. The federal funds rate is a market interest rate for overnight loans between banks and is influenced by the Fed's monetary policy decisions but is not a direct tool for controlling the money supply.

The Primary Tool the Fed Uses to Control the Money