Correct answer: C. buying and selling
The securities that are being bought and sold are government securities. Government securities are bonds or other financial certificates sold by the government. As Investopedia explains in regard to "open market operations," the purchase of government securities brings money into the banking system, stimulating growth by stimulating the money supply. The selling of government securities does the opposite, contracting the economy. The Federal Reserve uses open market operations to adjust and monitor the federal funds rate -- in other words, the interest rate at which banks borrow from each other.
