Question

When the federal reserve bank uses their open-market operations, they are: O using fiscal economic policy. O changing the percentage of deposits a bank must set aside. O buying or selling government bonds. O changing the interest rate they charge member banks.

Answer 1

Open market operations refer to when the Federal Reserve bank buys or sells government bonds in order to influence the quantity of bank reserves and interest rates.

Step-by-step explanation:

Open market operations refer to when the Federal Reserve bank buys or sells government bonds in order to influence the quantity of bank reserves and interest rates.

The specific interest rate targeted through open market operations is the federal funds rate, which is the interest rate charged by commercial banks for overnight loans to other banks.

Therefore, the correct answer is buying or selling government bonds.