What is the policy used most by the Fed to change the money supply?
A. changes in the money creation policy
B. changes in the discount rate
C. changes in the reserve requirements
D. open market operations
Is it D?
Yes it is D. Do you need anymore help with these questions?
not atm but soon
Okay just comment on this if you need anymore help.
Yes, the correct answer is D. The policy used most by the Federal Reserve (Fed) to change the money supply is open market operations. To arrive at this answer, we can briefly explain the other options:
A. Changes in the money creation policy: While the Fed does have some influence over the money creation process through its monetary policy, directly changing the money creation policy alone is not the primary tool used by the Fed to change the money supply.
B. Changes in the discount rate: The discount rate is the interest rate at which banks can borrow from the Federal Reserve. While changes in the discount rate can affect borrowing costs for banks and indirectly impact the money supply, it is not the primary policy tool used by the Fed to directly change the money supply.
C. Changes in the reserve requirements: Reserve requirements refer to the amount of funds that banks are required to hold in reserve against customer deposits. By changing reserve requirements, the Fed can influence the amount of excess reserves available to banks and indirectly impact the money supply. However, it is not the most commonly used policy tool by the Fed to directly change the money supply.
Therefore, D. open market operations, which involve buying or selling government securities on the open market, is the policy used most frequently by the Fed to directly change the money supply.