Which of the following is most frequently used when the Fed is attempting to adjust the money supply?

Question

Quizplus · Accepted Answer

Open market operations, or buying and selling government securities, is the most frequently used tool by the Fed to adjust the money supply. It allows the Fed to directly influence the reserves of banks and ultimately the amount of money in circulation. While reserve requirements and changing the discount rate can also be used, they are usually only adjusted in more extreme circumstances. Moral suasion is not a formal tool used by the Fed but instead refers to the persuasive influence the Fed can have on banks and financial institutions.

Which of the Following Is Most Frequently Used When the Fed