Question

what is the open market operations, description, and analysis

Answer 1

An open market Operation is a monetary policy tool of the Fed or Other Central banks of the nations to manage the liquidity in the market.

In open market operation, the FEd sells or purchase the bonds from the open market and release or absorb excess liquidity from the market. In a situation like inflation or overheating of the economy, the Fed will sell bonds to the public and absorb excess liquidity from the market. It will reduce the money supply and check inflation.

In case of low demand or depression in the market, the Fed will buy bonds form the market and release excess money in the market. This will increase the money supply and increase demand in the economy.