The most effective monetary policy tool of the Federal Reserve is

A) the reserve requirements.
B) discount operations.
C) margin requirements.
D) open market operations.
E) jawboning.

Monetary Policy Tool

Mechanisms used by central banks to manage the money supply and interest rates in order to influence economic activity and inflation.

Open Market Operations

Central bank activities involving the buying and selling of government securities in the open market to control the supply of money and interest rates.