If the Fed wants to temporarily inject reserves into the banking system,it will engage in
A)a repurchase agreement.
B)a matched sale-purchase transaction.
C)a reverse repurchase agreement.
D)an open market sale.

Question

Quizplus · Accepted Answer

A repurchase agreement (repo) is a short-term borrowing for dealers in government securities. The Fed buys securities with an agreement to sell them back, thus injecting reserves into the banking system temporarily.

If the Fed Wants to Temporarily Inject Reserves into the Banking