The Fed's primary tool to change the money supply is
A) changing the discount rate.
B) changing the reserve requirement.
C) conducting open market operations.
D) redeeming Federal Reserve notes.

Question

Quizplus · Accepted Answer

Conducting open market operations is the primary tool of the Federal Reserve to change the money supply. This involves buying or selling government securities in the open market, which affects the level of reserves in the banking system and ultimately the supply of money in the economy. Changing the discount rate and reserve requirement are also tools the Fed can use, but they are considered to be secondary tools. Redeeming Federal Reserve notes refers to exchanging them for gold and is no longer practiced in the United States.

The Fed's Primary Tool to Change the Money Supply Is