Free Discussion week 3 ECN221_1 Dissertation Example

Discussion Week 3 ECN221_1 Name Institution Discussion Week 3 ECN221_1 List and explain each of the three traditional tools the central bank has for controlling the money supply. Which is the most popular? Why? The Federal Reserve also referred to as the Fed plays an important role in maintaining financial stability. Again, it is also the Central Bank of the United States and determines the monetary policy of this nation. The Central Bank uses three main traditional tools in implementing monetary policy; they include open market operations, setting reserve requirement, and lending through the discount window (Axilrod, 2013). These policy instruments work together by influencing the availability of reserves in the banks. However, open market operations tool is considered to be the most popular. Open market operations are undertaken by the Federal Open-Market Committee (FOMC). This committee engages in the purchase and sell of the government securities. Additionally, they are sai...