You read an article in the paper that stated the Federal Reserve Bank sold $500 million of government securities on Tuesday of last week. When the Fed did this they were controlling the money supply by using which of the following tools?
A) open market operations
B) risk
C) reserve requirements ratio
D) discount rate
E) unable to tell with the information provided

Question

Quizplus · Accepted Answer

Open market operations involve the buying and selling of government securities by the Federal Reserve to control the money supply. Selling securities, as mentioned, is a direct application of this tool.

You Read an Article in the Paper That Stated the Federal