A Federal Reserve open-market operation whereby the Fed chooses not to replace its maturing Treasury with new securities from the Treasury is called a:
A) Run off operation
B) Dynamic operation
C) Defensive operation
D) Outright transaction
E) None of the above

Question

Quizplus · Accepted Answer

A run off operation occurs when the Federal Reserve allows its holdings of Treasury securities to mature without reinvesting the proceeds in new securities, effectively reducing the size of its balance sheet.

A Federal Reserve Open-Market Operation Whereby the Fed Chooses Not