Open market operations can best be characterized as:
A) Monetary policy only.
B) Both fiscal and supply-side policy.
C) Both monetary and fiscal policy.
D) Fiscal policy only.

Question

Quizplus · Accepted Answer

Open market operations are a tool used by central banks to control the money supply, which is a key aspect of monetary policy. They involve the buying and selling of government securities in the open market to influence the level of cash reserves in the banking system, which in turn affects interest rates and the overall economy. This tool does not directly involve fiscal policy, which is related to government spending and taxation decisions.

Open Market Operations Can Best Be Characterized As