What is the policy used most by the Fed to change the money supply?

open market operations

changes in the discount rate

changes in the money creation policy

changes in the reserve requirements

1 answer

The policy used most by the Federal Reserve (the Fed) to change the money supply is open market operations. This involves the buying and selling of government securities in the open market to influence the level of reserves in the banking system and, consequently, the overall money supply.

While changes in the discount rate and reserve requirements can also influence the money supply, open market operations are typically the primary tool used because they can be implemented quickly and have immediate effects on the economy.