Question

The Federal Reserve influences the level of interest rates in the short run by changing the:

A. demand for money through open market operations.

B. demand for money through changes in reserve requirements.

C.supply of money through open market operations.

D. supply of money through changes in stock market operations

Answer 1

The correct answer is letter "C": supply of money through open market operations.

Step-by-step explanation:

The United States Federal Reserve (Fed) facilitates a stable and growing economy by increasing the supply of money to spare growth and by shrinking the supply when inflation hits. Its three (3) main tools are manipulating reserve requirements, changing the discount rate, and open-market operations.