Open market operations are

Question

Quizplus · Accepted Answer

Open market operations refer to the buying and selling of existing U.S. government securities in open private markets by the Fed. This is a commonly used monetary policy tool to influence short-term interest rates and the money supply in the economy. Option A refers to private citizens and banks engaging in trading securities, but does not specifically refer to open market operations conducted by the Fed. Option C, financing deficit financing by the government, is not a primary objective of open market operations. Option D, selling new government securities to increase the money supply, is an incorrect statement as selling securities would decrease the money supply.

Open Market Operations Are