The most powerful (but seldom used)tool at the Federal Reserve's disposal is

Question

Quizplus · Accepted Answer

While all of the options listed are tools used by the Federal Reserve, setting reserve requirements is the most powerful and can have the biggest impact on the money supply. Reserve requirements determine the amount of money that banks must hold in reserve, which affects how much money can be loaned out and circulated in the economy. Changing reserve requirements can have a ripple effect throughout the economy and can either encourage or slow down borrowing and spending. However, reserve requirements are seldom used because they are seen as a drastic measure and can have unintended consequences.

The Most Powerful (But Seldom Used)tool at the Federal Reserve's