Open Market Operations & the Federal Reserve: Definition & Examples

Instructions:

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question 1 of 3

The purchases and sales of government securities in the open market by the Federal Reserve are referred to as which of the following?

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1. When the reserve ratio is 20%, the Fed buys $500,000 worth of government bonds in the open market. What is the maximum amount that the money supply could increase?

2. What will the purchase of government bonds from the public in the open market by the central bank do?

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About This Quiz & Worksheet

By taking a look at what the Fed does to control the money supply, this quiz and corresponding worksheet will help you gauge your knowledge of open market operations. For most of the questions, you'll need to understand how the money supply is affected when the Federal Reserve takes certain steps.

Quiz & Worksheet Goals

Use this printable worksheet and the corresponding online quiz to review:

  • What the buying and selling of government securities is called
  • Finding the possible amount of money supply increase
  • Effects of purchasing government bonds
  • What happens when the Fed sells government securities

Skills Practiced

This worksheet and quiz will let you practice the following skills:

  • Interpreting information - verify you can read information regarding effects of purchasing government bonds and interpret it correctly
  • Knowledge application - use your knowledge to answer questions about what happens when the Fed increases how many government securities it sells
  • Problem solving - use acquired knowledge to solve various money supply problems

Additional Learning

To learn more about the central bank's huge role in our economy, review the corresponding lesson called Open Market Operations & the Federal Reserve: Definition & Examples. This lesson will help you:

  • Understand how the central bank encouraged economic growth in 2010
  • Describe the role of the Federal Reserve bank
  • Explain what open market operations are
  • Identify who is responsible for the open market operations
  • Know how to calculate changes in the money supply
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