The tools of the Federal Reserve include

Question

Quizplus · Accepted Answer

All three tools (reserve requirements, the discount rate, and open market operations) are utilized by the Federal Reserve to control the money supply and influence interest rates. Reserve requirements determine the amount of money banks must hold in reserve, the discount rate is the interest rate at which banks can borrow from the Federal Reserve, and open market operations involve the buying and selling of government securities to affect the federal funds rate.

The Tools of the Federal Reserve Include