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

Question

Quizplus · Accepted Answer

Open-market operations directly change commercial bank reserves by buying or selling government securities, which affects the amount of reserves banks have available to lend. The monetary multiplier is determined by factors like the reserve requirement and people's willingness to hold cash, which are not directly altered by open-market operations.

Open-Market Operations Change