Open-market operations change:
A)the size of the monetary multiplier, but not chartered bank reserves.
B)chartered bank reserves, but not the size of the monetary multiplier.
C)neither chartered bank reserves nor the size of the monetary multiplier.
D)both chartered bank reserves and the size of the monetary multiplier.

Question

Quizplus · Accepted Answer

Open-market operations directly affect chartered bank reserves by buying or selling government securities, which influences the amount of reserves banks hold. However, they do not change the size of the monetary multiplier, which is determined by the reserve requirement ratio.

Open-Market Operations Change