Open market operations is a more flexible tool of monetary policy than changing the reserve requirements.

Question

​Open market operations is a more flexible tool of monetary policy than changing the reserve requirements.

Quizplus · Accepted Answer

Open market operations involve the buying and selling of government securities, which allows the central bank to directly affect the money supply in the economy. This tool is more flexible because the central bank can easily adjust the size and timing of its security purchases or sales. Changing reserve requirements, on the other hand, involves a more cumbersome regulatory process and can have unintended consequences for individual banks.

​Open Market Operations Is a More Flexible Tool of Monetary

Open Market Operations Is a More Flexible Tool of Monetary