Compared to the other tools the Fed uses to change the money supply, the discount window is used:
A) less often than open market operations, but more often than the reserve requirement.
B) more often than open market operations and the reserve requirement.
C) about the same as open market operations, but more often than the reserve requirement.
D) more often than open market operations, and about the same as the reserve requirement.

Question

Quizplus · Accepted Answer

The discount window is used less often than open market operations, but more often than the reserve requirement. Open market operations are the most frequently used tool by the Fed to change the money supply, as they involve buying or selling government securities. The reserve requirement is used the least often, as it involves changing the percentage of deposits that banks are required to hold in reserve. The discount window falls in between, as it involves lending to banks directly to provide liquidity.

Compared to the Other Tools the Fed Uses to Change