AP MacroeconomicsMoney & Monetary Policy
Open Market Operations
Open market operations are the central bank's buying and selling of government bonds to change the money supply.
Buying bonds injects reserves and increases the money supply (expansionary); selling bonds removes reserves and decreases it (contractionary). They are the Federal Reserve's most-used monetary policy tool. They directly affect bank reserves and short-term interest rates.
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Money Market →
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Study module
Monetary Policy →
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