Question

Which is a tool used by the Federal Reserve to influence the volume of money in the economy by buying and selling government securities?

A.
reserve requirement
B.
personal income tax
C.
open market operations
D.
loose money policy

Answer 1

The correct answer is C. open market operations

This is a business practice in which the federal reserve influences how much money can be found in the market by buying or selling government securities in the open market. It is a complex economic practice in which numerous banks are involved and it is used to affect the volume of money out in the field accessible to people.