The buying or selling of U.S. government bonds in the open market is called _____

Question

Quizplus · Accepted Answer

The buying or selling of U.S. government bonds in the open market is called open-market operations. The Federal Reserve often uses open-market operations as a tool to control the money supply and interest rates.

Option A is not correct because discount window lending is when banks borrow money from the Federal Reserve.

Option B is not specific enough as providing liquidity could involve various actions such as buying or selling assets, lending money, or decreasing reserve requirements.

Option D is not relevant as quantitative tightening refers to a reduction in the supply of money and credit by selling government bonds, raising interest rates or increasing reserve requirements.

Option E refers to a specific type of quantitative easing, which is not the only action that can be taken by open-market operations.

The Buying or Selling of U