An open market operation involves
A) raising the debt limit of the United States.
B) the issuance of new corporate stock.
C) the Federal Reserve's purchase or sale of government securities.
D) changing federal income tax rates.

Question

Quizplus · Accepted Answer

An open market operation is a monetary policy tool used by the Federal Reserve to control the money supply. This involves the purchase or sale of government securities by the Federal Reserve in the open market. When the Fed buys securities, it injects money into the economy, increasing the money supply, and when it sells securities, it removes money from the economy, decreasing the money supply.

An Open Market Operation Involves