If you were in a discussion about The Federal Reserve System about the tools they use to pursue montery policy and what tool they use the most how would you comment or reply to the follow the statement is it right, wrong the correct use by FED and so on.
The Federal Reserve System is sanctioned to ensure that there is enough money, as well as credit, in the funding system that is needed to upkeep a budding economy. The Federal Reserve System also has the power to buy (and sell) government securities in order to lend to associate banks and to require that associate banks hold a reserve obligation equivalent to a percentage of their bond. Steady interest rates, firm financial markets, economic development, and constant exchange rates are just a few of the goals set forth by the Federal Reserve System. The Fed purchases and sells government securities, sets the reduced rate, & sets permissible reserve requirements for associate banks. The open market is the tool that is most commonly used by the Federal Reserve.