The most frequently used tool of monetary policy is:
A)open-market operations. changes
B)in the discount rate. changes in
C)reserve requirements. changes in
D)the money multiplier.

Question

Quizplus · Accepted Answer

Open-market operations are the most frequently used tool of monetary policy. This involves the buying and selling of government securities by the central bank (in the US, the Federal Reserve). By buying securities, the central bank injects money into the economy, which can stimulate economic growth and increase inflation. By selling securities, the central bank removes money from the economy, which can slow down economic growth and decrease inflation. This tool is preferred because it is flexible and can be easily adjusted to respond to changing economic conditions.

The Most Frequently Used Tool of Monetary Policy Is