Which of the following is the primary tool the Fed uses to control the supply of money?
A) The discount rate.
B) The reserve requirements.
C) Open market operations.
D) The 30-year home-mortgage interest rate.

Question

Quizplus · Accepted Answer

Open market operations involve the buying and selling of government securities, which directly affects the money supply. By buying securities, the Fed increases the money supply, and by selling securities, it decreases the money supply. This is the primary tool the Fed uses to control the money supply.

Which of the Following Is the Primary Tool the Fed