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Borrowing and buying money is what causes Federal Reserve to reserve ratios less effective. Open market operations is what gives discount rates.

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The first answer is incorrect and the grammar needs improvement. Adjustments in required

reserve ratios are less flexible than the latter two choices.

Changes in reserve ratios are also to broad in that they affect all member banks in a given class. Also ratio adjustments complicate forward planning by all banks concerned.

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Q: What causes Federal Reserve adjustments in required reserve ratios less effective than open market operations and changes in the discount rate as a tool for monetary management?
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