Which of the following statements is most correct?
A) Open-market operations do not always lead to an increase in the volume of lending.
B) Open-market operations don't always lead to an immediate change in the volume of deposits; this is especially true when bonds are purchased to expand deposit growth.
C) Open-market operations always lead to an immediate change in the volume of deposits; this is especially true when bonds are sold to restrict deposit growth.
D) Increasing reserve requirements always leads to an immediate increase in the volume of lending; this is especially true when bonds are sold to restrict deposit growth.

Question

Quizplus · Accepted Answer

Open-market operations can impact the availability of funds for lending, but the decision to actually lend money is ultimately up to individual banks and is influenced by a variety of factors. Therefore, it is not accurate to say that these operations always lead to an increase in lending volume.

Which of the Following Statements Is Most Correct