question archive The primary tool of monetary policy is: A
The primary tool of monetary policy is: A
Subject:EconomicsPrice:2.88 Bought3
The primary tool of monetary policy is:
A. the discount rate.
B. the reserve requirement.
C. the prime rate.
D. open market operations.
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The answer is: D. open market operations.
Of all the monetary policy tools that the Fed uses to control the money supply, the open market operations (OMO) is the most important. The open market operations involve the purchase and selling of government securities to the general public. One of the reasons why the Fed uses this tool most frequently is that it is the most flexible tool of monetary policy.
