The use of which tool of the Federal Reserve has the smallest impact on money supply levels?a. Open market operationsb. Discount ratec. Reserve requirementsd. Margin on securities

d. Margin on securities

Explanation:

Margin Requirements on securities are collateral that a trader must keep when they want to borrow money. The Fed can control money supply using this by increasing the margin requirement which would reduce the amount that the trader will have to trade with thereby reducing money supply.

This represents the least effective monetary tool of the 4 options listed for the simple reason that it mainly affects the stock market which is although big, is not big enough to match the influence of the other instruments of monetary policy.

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