When the Fed buys or sells securities,it is conducting ________ operation.
A)a government debt
B)an open market
C)a money multiplier
D)a deposit
E)a currency

Question

Quizplus · Accepted Answer

When the Fed buys or sells securities, it is conducting an open market operation. This is one of the tools used by the Federal Reserve to manage the money supply and influence interest rates. The Fed buys securities (usually government bonds) from banks and other financial institutions in exchange for cash, which increases the amount of money in circulation. Conversely, when the Fed sells securities, it removes cash from circulation, which can help to lower inflation and prevent the economy from overheating.

When the Fed Buys or Sells Securities,it Is Conducting ________