If Treasury deposits at the Fed are predicted to ________,the manager of the trading desk at the New York Fed bank will likely conduct ________ open market operations to ________ reserves.
A)rise;defensive;drain
B)fall;defensive;drain
C)rise;dynamic;inject
D)fall;dynamic;drain

Question

Quizplus · Accepted Answer

If Treasury deposits at the Fed are predicted to fall, the manager of the trading desk at the New York Fed bank will likely conduct defensive open market operations to drain reserves. This is because fewer Treasury deposits at the Fed means less money available to lend out, so draining reserves can help stabilize short-term interest rates.

If Treasury Deposits at the Fed Are Predicted to ________,The