Open Market operations consist mainly of ________.
A)the government buying and selling private securities in the open market
B)the Fed buying and selling government securities in the open market
C)the government selling its own securities in the open market
D)the Fed setting rates for securities traded in the open market
E)none of the above

Question

Quizplus · Accepted Answer

Open Market Operations (OMO) involve the buying and selling of government securities in the open market by the Federal Reserve (the Fed). These securities can include Treasury bills, notes, and bonds. The Fed uses OMO to increase or decrease the money supply and influence interest rates. When the Fed buys government securities, it injects money into the economy, and when it sells securities, it takes money out of the economy. As a result, OMO is a crucial tool for the Fed in implementing its monetary policy.

Open Market Operations Consist Mainly of ________