How does open market operations change the money supply?

Open market operations involve the buying and selling of government securities by a central bank to influence the money supply. When the central bank purchases securities, it injects money into the banking system, increasing the money supply and typically lowering interest rates. Conversely, when it sells securities, it withdraws money from the system, decreasing the money supply and usually raising interest rates. These operations are a key tool for managing monetary policy and achieving economic stability.