Overview
Open Market Operations are a crucial tool used by central banks to manage the economy by controlling the money supply and influencing interest rates. By buying or selling government securities, central banks can either stimulate economic growth or curb inflation, depending on the economic conditions...
Key Terms
Example: The Federal Reserve is the central bank of the United States.
Example: An increase in money supply can lead to inflation.
Example: A lower interest rate encourages more borrowing.
Example: Treasury bonds are a type of government security.
Example: High inflation can erode purchasing power.
Example: Cash is the most liquid asset.
Related Topics
Monetary Policy
The process by which a central bank manages the money supply and interest rates to achieve economic goals.
intermediateFiscal Policy
Government spending and tax policies used to influence economic conditions.
intermediateInflation Control
Strategies and measures taken to manage and reduce inflation in an economy.
advancedKey Concepts
money supplyinterest ratescentral bankgovernment securities