A Federal Reserve open-market operation designed to keep the present pattern of interest rates and credit availability about where they are is known as a:
A) Run off operation
B) Dynamic operation
C) Defensive operation
D) Outright transaction
E) None of the above

Question

Quizplus · Accepted Answer

A defensive operation by the Federal Reserve in open-market operations is aimed at maintaining the current levels of interest rates and credit availability, rather than seeking to change them. This is done to manage the day-to-day liquidity of the banking system and to offset other conditions affecting bank reserves.

A Federal Reserve Open-Market Operation Designed to Keep the Present