When the Federal Reserve buys or sells Treasury securities to affect the money supply, it uses
A) open market operations.
B) reserves at commercial banks.
C) discount rate adjustments.
D) federal funds adjustments.

Question

Quizplus · Accepted Answer

Open market operations involve the buying and selling of government securities by the Federal Reserve to control the money supply. Buying securities injects money into the banking system, increasing the money supply, while selling securities withdraws money, decreasing the money supply.

When the Federal Reserve Buys or Sells Treasury Securities to Affect