Which of the following is the Fed's most common way to change the money supply?

Question

Quizplus · Accepted Answer

Open market operations are the Fed's most common way to change the money supply. Open market operations involve the buying and selling of government securities, which affects the reserves of banks and ultimately the money supply. Moral suasion is a persuasive technique used by the Fed to influence behavior, the discount rate is the interest rate the Fed charges banks for borrowing money, and the required reserve rate is the percentage of deposits banks must hold as reserves. While these tools can also impact the money supply, they are not the most commonly used by the Fed.

Which of the Following Is the Fed's Most Common Way