An open market operation occurs when the ________ buys or sells securities ________.

Question

Quizplus · Accepted Answer

An open market operation is an activity in which the central bank, such as the Federal Reserve System in the U.S., buys or sells securities in the open market (i.e. from or to the public) to influence the money supply, interest rates, and other economic variables. Choice A is incorrect as the federal government is not usually involved in these transactions. Choice C is incorrect as commercial banks are not authorized to conduct open market operations. Choice D is incorrect as it does not specify the role of the central bank in the transaction.

An Open Market Operation Occurs When the ________ Buys or Sells