The main tool that the Federal Reserve uses to conduct monetary policy is

Question

Quizplus · Accepted Answer

Open market operations involve the buying and selling of government securities (bonds) on the open market, which directly affects the money supply and interest rates. The Federal Reserve uses this tool to achieve its monetary policy objectives, such as controlling inflation or promoting economic growth. While discount policy, reserve requirements, and acting as the lender of last resort are also tools that the Fed can use, open market operations are the most frequently used and effective way for the Fed to influence the economy. Check clearing is not a tool used for monetary policy.

The Main Tool That the Federal Reserve Uses to Conduct