The Federal Reserve System exercises its most direct control of the money supply:
A)by the issuance of Federal Reserve notes
B)through reserve requirements
C)by setting the discount rates on loans to depository institutions
D)through open market operations

Question

Quizplus · Accepted Answer

The Federal Reserve exercises its most direct control over the money supply through open market operations, which involve the buying and selling of government securities to influence the level of bank reserves and interest rates.

The Federal Reserve System Exercises Its Most Direct Control of the Money