How to find the effect of government securities on money supply

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AP Macroeconomics › How to find the effect of government securities on money supply

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Which of the following are considered open-market activities?

Selling Government Bonds

CORRECT

Decreasing Taxes

0

Increasing Government Spending

0

Raising Bank Reserve Requirements

0

None of these would be considered Open Market Activities

0

Explanation

Selling Government Bonds would be considered open market activities. When the Federal Reserve wants to adjust interest rates, they conduct open market operations - which involves selling government bonds (which raises interest rates by decreasing the money supply) or buying government bonds (which lowers interest rates by increasing the money supply.)