What is the name and make-up of the policymaking group that has the authority to conduct open market operations? Describe how the use of open market operations helps to increase or decrease the money supply

Answer 1

The group responsible for conducting open market operations is the Federal Open Market Committee (FOMC). The FOMC is made up of twelve members. They are the seven board members, the president of the New York Federal Reserve District Bank, and four other Federal Reserve District Bank presidents (who rotate on and off the committee every year). In order to decrease the money supply, the Fed sells government securities (called an open market sale). As the Fed makes an open market sale, the money paid to the Fed by the buyer of the securities will result in a decrease in bank reserves and the money supply will ultimately decrease.