When the central bank engages in open market operations, it is:
A) surveying the credit markets to see if there are shortages or surpluses in them.
B) borrowing and lending to banks in the federal funds market.
C) buying and selling stocks on the stock market.
D) buying and selling government bonds in the secondary bond markets.

Question

Quizplus · Accepted Answer

Open market operations involve the buying and selling of government bonds in the secondary bond markets by the central bank to control the money supply and interest rates.

When the Central Bank Engages in Open Market Operations, It