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The Fed, Federal Reserve System, has three tools to use for its monetary policy. 1. Open Operations - buying or selling securities from the privite sector to control money supply.

2. Discount Loans - Setting discount rate that privite sector banks would need to pay the Fed to borrow money from them.

3. Reserve requirements - sets amount of money banks must have in their vaults in case customers come take money out.

The Fed's current monetary policy is price stability and implicitly controling inflation.

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