Open market operations refer to
A) all economic transactions not undertaken on the black market
B) imports and exports of goods
C) international currency transactions
D) central banks holding reserves and lending to member banks
E) the purchase and sale of treasury securities by central banks

Question

Quizplus · Accepted Answer

Open market operations refer to the buying and selling of government securities by central banks in order to influence the money supply and interest rates in the economy. This is typically done by buying treasury securities from banks and paying for them with newly created reserves, which increases the amount of money in circulation, or selling treasury securities to banks and taking reserves out of circulation, which decreases the amount of money in circulation. This is a key tool used by central banks to manage monetary policy.

Open Market Operations Refer to