Question

In two or three sentences, describe how open-market operations change the money supply.

Answer 1

Answer:

Fed buys and sells government securities in the open market. If the Fed wants to increase the money supply, it buys government bonds. This supplies the securities dealers who sell the bonds with cash, increasing the overall money supply.

Answer 2

Answer: Open market operations is the buying and selling of government securities in the open market. So, if the operations want to increase the money supply in the economy, they will buy more securities. And if they want to decrease the money supply, they will sell more.

Explanation: Quizlet :)