Question

20 Open market operations refer to the purchase or sale of ________ to control the money supply.

corporate bonds and stocks by the Federal Reserve

U.S. Treasury securities by the Federal Reserve

corporate bonds and stocks by the U.S. Treasury

U.S. Treasury securities by the U.S. Treasury

Answer 1

In open market operations which is done by the Federal reserve Bank

The goal is to increase or decreasethe money supply by implementing expansionary and contractionary monetary policy respectively

If the goal is to increase the money supply then Bank purchases the government securities and if the goal is to reduce the money supply then Federal reserve sells government securities

The selling and buying is not done by US treasury department

In open market operations corporate bonds and stocks are not sold or bough

Hence the only correct answer here is option B