Which of the following is the Federal Reserve most likely to use to change the nation's money supply?
A)Open-market operations
B)Reserve requirements
C)Discount lending
D)Credit controls

Question

Quizplus · Accepted Answer

Open-market operations involve the buying and selling of government securities, which directly affects the supply of money in the economy. By purchasing securities, the Federal Reserve increases the money supply, while selling securities decreases the money supply. Reserve requirements, which mandate the amount of reserves banks must hold, can also affect the money supply, but they are not as flexible as open-market operations. Discount lending and credit controls are other tools that the Federal Reserve can use, but they are not as commonly used as open-market operations.

Which of the Following Is the Federal Reserve Most Likely