What are the four tools through which the Fed affects the economy? Briefly explain how the open market operations and interest on reserves work. (How does the Fed use them to affect interest rates.)

a. Discount rate, reserve requirements, open market operations, and interest on reserves.
b. Fiscal policy, monetary policy, exchange rate policy, and interest rate policy.
c. Government spending, taxation, subsidies, and public debt.
d. Inflation targeting, quantitative easing, tapering, and forward guidance.