(Answered) 1 this question pertains to the tools of monetary

Economics

1. This question pertains to the tools of monetary policy

a) Why does the Fed use open-market operations as its principal tool of monetary management, rather than changes in the required reserve ratios, or changes in the discount rate? (Hint: Think about the matter of "announcement effects")

b) What are the differences in the effects that each technique would have on individual banks, on the commercial banking system as a whole, and on the money supply?

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