Since the 1930s,the Fed's most important tool for controlling the money supply has been
A)setting the discount rate.
B)setting reserve requirements.
C)moral suasion.
D)open-market operations.

Question

Quizplus · Accepted Answer

Open-market operations refer to the buying and selling of government securities in the open market by the Federal Reserve. By conducting open-market operations, the Fed can influence the money supply in the economy. When the Fed buys government securities, it injects money into the economy, increasing the money supply. When it sells securities, it pulls money out of the economy, reducing the money supply. Since the 1930s, open-market operations have been the Fed's most important tool for controlling the money supply.

Since the 1930s,the Fed's Most Important Tool for Controlling the Money