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When the Federal Reserve buys and sells government bonds it is Blank______.Multiple choice question.setting fiscal policyengaging in open market operationssetting the reserve requirementaltering the discount rate

Question

When the Federal Reserve buys and sells government bonds it is Blank______.Multiple choice question.setting fiscal policyengaging in open market operationssetting the reserve requirementaltering the discount rate

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Solution

The correct answer is "engaging in open market operations". When the Federal Reserve buys and sells government bonds, it is a part of their monetary policy known as open market operations. This is a tool they use to control the money supply in the economy.

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