Which of the following is most frequently used when the Fed is attempting to adjust the money supply?
A)Changing reserve requirements
B)Open market operations
C)Changing the discount rate
D)Moral suasion

Question

Which of the following is most frequently used when the Fed is attempting to adjust the money supply?
A)​Changing reserve requirements
B)​Open market operations
C)​Changing the discount rate
D)​Moral suasion

Quizplus · Accepted Answer

Open market operations, which involve the buying or selling of government securities by the Federal Reserve, are the most frequently used tool for adjusting the money supply. By buying securities, the Fed injects money into the economy and increases the money supply, while selling securities takes money out of circulation and decreases the money supply. Reserve requirements and the discount rate are also used, but less frequently. Moral suasion, which involves the Federal Reserve urging banks to take certain actions, is not a direct tool for adjusting the money supply.

Which of the Following Is Most Frequently Used When the Fed