Open market operations occur when _____.
A)municipal authorities bring out policies that provide better social security benefits.
B)the government improves the infrastructure of the economy to attract foreign investors.
C)the Federal Reserve buys or sells Treasury securities to expand or contract the U.S. money supply.
D)private companies establish agencies to trade their stocks in the market.
E)the public establishes a non-profit entity to trade in the market on behalf of the community.

Question

Open market operations occur when _____. 
A)municipal authorities bring out policies that provide better social security benefits.
B)the government improves the infrastructure of the economy to attract foreign investors.
C)the Federal Reserve buys or sells Treasury securities to expand or contract the U.S. money supply.
D)private companies establish agencies to trade their stocks in the market.
E)the public establishes a non-profit entity to trade in the market on behalf of the community.

Quizplus · Accepted Answer

Open market operations refer to the buying or selling of government securities, generally Treasury bills, by the Federal Reserve to either increase or decrease the money supply in the economy. This is a key tool used by the Federal Reserve to implement monetary policy. Choices A, B, D, and E do not accurately describe open market operations.

Open Market Operations Occur When _____