Open-market operations refer to
A) purchases of stocks in the New York Stock Exchange.
B) the purchase or sale of government securities, as well as collateralized money loans, by the Fed.
C) central bank lending to commercial banks.
D) the specifying of loan maximums on stock purchases.

Question

Quizplus · Accepted Answer

Open-market operations refer to the purchase or sale of government securities, as well as collateralized money loans, by the Fed. This is a tool used by central banks to control the money supply and influence interest rates in the economy. Option A, purchases of stocks in the New York Stock Exchange, is not a part of open-market operations. Option C, central bank lending to commercial banks, refers to discount rate lending, which is another tool used by central banks. Option D, specifying loan maximums on stock purchases, is not related to open-market operations.

Open-Market Operations Refer to