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An open market policy can be used to stimulate the economic activity by increasing the money supply, lowering the interest rates and the change in reserve banks.

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Q: How can open market operations expand the economy?
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What are the three tools the Fed uses to keep the economy stable?

Open market operations, discount rates, and reserve requirements.


When the Fed buys government bonds and other securities on the open market?

Open-market operations


What is a tool used by the Federal Reserve to influence the volume of money in the economy by buying and selling government securities?

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The Federal Reserve respond to an overheated economy or boom by selling bonds in the open market.


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