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Question

Open market operations take place when the

central bank buys or sells stocks

central bank buys or sells government bonds

(c central bank increases or decreases the discount rate to monitor the money supply

central bank increases or decreases reserve requirements for depository institutions

commercial banks borrow reserves from the central bank

Answer

central bank buys or sells government bonds.

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Open market operations refer to the buying and selling of government securities by the central bank in the open market. When the central bank buys government securities,...