The Federal Reserve change the money supply and interest rates in the economy broadly by using two measures; 1. Quantitative Measures - Open Market Operations (OMO) - Cash Reserve Ratio (CRR) - Statutory Liquidity Ratio (SLR) - Bank Rate Policy - Discount Rate 2. Qualitative Measures - Marginal requirements - Consumer Credit Regulation - Rationing of credit The Fed’s most important and widely used policy tool is OMO, which necessities that banks keep 10% of the value of existing deposits on reserve with the FED. OMO involves the buying and selling of government debt, such as; treasury bills, notes, and bonds by the FED. The Fed will change the percentage of the deposits that the banks must keep on reserve (the reserve equipment). If the Fed