The Federal Open Market Committee meets eight times a year to maintain or change policy. A vote to change policy will result in

A) increasing or decreasing spending on infrastructure.

B) increasing or decreasing taxes to influence aggregate demand.

C) increasing or decreasing spending on essential goods and services.

D) either buying or selling U. S. government securities on the open market.

Answer: D) either buying or selling U. S. government securities on the open market.

Explanation: The Federal Open Market Committee regulates the economy by either buying or selling U. S. government securities on the open market. They meet at least eight times a year to regulate the business cycle of economic activities to maintain American economic health. This committee consists of twelve members consisting of seven members of the Board of Governors and five of the twelve reserve bank presidents.

The correct answer is D) Either buying or selling U. S. government securities on the open market.

That action is also known as open market operations and its one of the three instruments of monetary policy that the Federal Reserve (or which the Federal Open Market Committee is part of) has at its dsposal.

Open market operations are in fact the most commonly used instrument of monetary policy, and it is used essentially to control the interest rate. It consists in the buying or selling of US government bonds. For example, when the Federal Reserve wants to lower the interest rate, it buys government bonds, hence, putting more dollars in the market, because the dollars that were used to buy those bonds are now in circulation, either in banks, or the hands of people as cash. Because now there are more dollars in the market, banks have more money available to lend, and therefore, charge a lower interest rate when a person wants to borrow.