CLEP Principles of Macroeconomics Exam Prep

Answer - B - Open-market operations are the most powerful tool the Fed has for adjusting bank reserves.

Key Takeaway: Open-market operations (also known as OMOs) are part of how the Fed controls the money supply. Through OMOs, the Fed buys and sells government securities like Treasury bonds and bills and other federal agency securities within the open market. Policy decisions about OMOs are made every six weeks by the Federal Open Market Committee.