Open-market operations are:
A)sales or purchases of government securities,by the Fed to or from banks on the open market.
B)regulations that sets the minimum fraction of deposits banks must hold in reserve.
C)allows any bank to borrow reserves from the Fed at a special interest rate,called the discount rate.
D)None of these is true.

Question

Quizplus · Accepted Answer

Open-market operations refer to the Fed's activities of buying or selling government securities on the open market to influence the supply of money and credit in the economy. The term "open market" refers to the fact that the transactions take place in the open market through commercial banks and other financial institutions. Therefore, option A is the correct answer. Options B and C refer to other monetary policy tools used by the Fed. Option D is incorrect as option A is true.

Open-Market Operations Are