Which is used most often by the Federal Reserve to control the money supply?
A) open market operations
B) discount lending
C) the Term Auction Facility
D) paying interest of reserves

Question

Quizplus · Accepted Answer

Open market operations involve the buying and selling of government securities in order to influence the money supply. The Federal Reserve uses this method the most frequently to control the money supply. Discount lending and the Term Auction Facility are less frequently used tools. Paying interest on reserves is a recent development and does affect the money supply but is not the primary tool used by the Federal Reserve.

Which Is Used Most Often by the Federal Reserve to Control