Question

By using open market operations, the Federal Reserve adjusts the supply of reserves to keep the federal funds interest rate equal to its target. adjusts the supply and demand of reserves to keep the federal funds interest rate equal to its target. adjusts the demand of reserves to keep bank rates in line with the federal funds rate target. controls banks' demand for reserves, thereby keeping the federal funds rate equal to its target. None of these answers is correct.

Answer 1

Adjusts the supply of reserves to keep the federal fuds interest rate equl to its target

Step-by-step explanation:

Of the three instruments used to control money supply the open market operations are the main.By controlling the quantity of money supply the Fed is able to keep the federal funds rate equal to its target rate.