The monetary policy instrument the Federal Reserve chooses to use is the

Question

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The Federal Reserve chooses to use the federal funds rate as the monetary policy instrument to achieve its objectives of price stability and full employment. The federal funds rate is the rate at which banks lend or borrow funds overnight from each other, and it is set by the Federal Reserve through open market operations. By buying or selling government securities in the open market, the Fed can increase or decrease the supply of reserves in the banking system, which in turn affects the federal funds rate. Thus, the federal funds rate serves as the primary tool for implementing monetary policy in the United States.

The Monetary Policy Instrument the Federal Reserve Chooses to Use