Open market operations are the
A) buying and selling of Federal Reserve Notes in the open market.
B) means by which the Fed supplies the economy with currency.
C) means by which the Fed acts as the government's banker.
D) buying and selling of government securities by the Fed.
E) buying and selling of government securities by the Treasury.

Question

Quizplus · Accepted Answer

Open market operations refer to the buying and selling of government securities by the Fed. This is the most common tool used by the Fed to control the money supply and interest rates in the economy. By buying securities, the Fed injects money into the economy and by selling securities, it removes money from the economy.

Open Market Operations Are the