Why does the open economy effect occur

The open market operations conducted by the Federal Reserve affect the money supply of an economy through the buying and selling of government securities.

Explanation:

government securities on the open market, it increases the reserves of commercial banks and allows them to increase their loans and investments; increases the price of government securities and effectively reduces their interest rates; and decreases overall interest rates, promoting business investments.

allows open economy effects.

Explanation:

spend more and even less than what is being earned through the output. of goods and other services.