Prior to 2008, the primary tool used by the Fed to control the money supply was
A) the manipulation of the required reserve ratio banks must hold against their checking deposits.
B) the extension of loans to financial institutions.
C) the buying and selling of stocks and corporate bonds.
D) the buying and selling of U.S. Treasury securities.

Question

Quizplus · Accepted Answer

Prior to 2008, the primary tool used by the Fed to control the money supply was buying and selling of U.S. Treasury securities. This is also known as open market operations, where the Fed buys or sells government securities to increase or decrease the money supply.

Prior to 2008, the Primary Tool Used by the Fed