When the Federal Reserve engages in a repurchase agreement to offset a withdrawal of Treasury funds from the Federal Reserve,the open market operation is said to be
A)defensive.
B)offensive.
C)dynamic.
D)reactionary.

Question

Quizplus · Accepted Answer

A repurchase agreement entered into by the Federal Reserve to counterbalance a withdrawal of Treasury funds is known as a defensive open market operation. This is because the main goal of such an operation is to defend against any potential negative impacts on the economy resulting from the withdrawal of funds.

When the Federal Reserve Engages in a Repurchase Agreement to Offset