Which of the following statements about open market operations is FALSE?
A) Open market operations either create new reserves or destroy existing reserves in the system.
B) Changes in reserves can be achieved quickly because operations are carried on every business day.
C) The Fed deals only with commercial banks and other depository institutions in its open market operations.
D) The quantity of reserves can be altered slightly or greatly, depending on the quantity of government securities bought or sold.

Question

Quizplus · Accepted Answer

The Federal Reserve, in its open market operations, does not limit its dealings exclusively to commercial banks and other depository institutions; it can also transact with primary dealers, which include securities brokers and dealers.

Which of the Following Statements About Open Market Operations Is