The tool used most frequently by the Fed to control the money supply is
A)changes in the premiums charged for FDIC deposit insurance.
B)open market operations.
C)changes in the discount rate.
D)changes in reserve requirements.

Question

Quizplus · Accepted Answer

Open market operations is the most frequently used tool by the Fed to control the money supply. It involves the buying and selling of government securities in the open market to influence the level of reserves in the banking system, which in turn affects the money supply. Changes in the premiums charged for FDIC deposit insurance, the discount rate, and reserve requirements are also used to control the money supply, but they are less frequently used than open market operations.

The Tool Used Most Frequently by the Fed to Control