Which of the following is the most frequently used tool of monetary policy?
A)changing the discount rate
B)changing reserve requirements
C)open market operations
D)interest rate changes

Question

Which of the following is the most frequently used tool of monetary policy?
A)changing the discount rate 
B)changing reserve requirements 
C)open market operations 
D)interest rate changes

Quizplus · Accepted Answer

Open market operations, where the Federal Reserve buys and sells government securities to influence the money supply in the economy, is the most frequently used tool of monetary policy. It is used by the Federal Reserve on a regular basis to adjust short-term interest rates in the economy. While the other tools (changing the discount rate, changing reserve requirements, and interest rate changes) are also used, they are less frequently used and typically used in conjunction with open market operations.

Which of the Following Is the Most Frequently Used Tool