When the Fed conducts open market operations, it buys and sells:
A) stocks.
B) government securities.
C) foreign currency
D) gold.

Question

Quizplus · Accepted Answer

The Fed buys and sells government securities, such as Treasury bonds and bills, in order to either increase or decrease the money supply in the economy. This is done through open market operations, which can involve purchasing securities from banks and other financial institutions or selling securities in order to decrease the amount of money in circulation. The Fed does not buy or sell stocks, foreign currency, or gold as part of its open market operations.

When the Fed Conducts Open Market Operations, It Buys and Sells