When the Federal Reserve buys or sells U.S. Treasury bonds, bills and notes, it is influencing the money supply through ________
A) imposing reserve requirements
B) offering discount rates
C) selective credit controls
D) open-market operations
E) changing the value of derivatives
Answer: D
Explanation: Federal government buys treasuries to increase money supply and sells treasuries to decrease money supply. Because these transactions take place on the open market, they are known as open-market operations.
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