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)increase; defensive; inject
B)decrease; defensive; drain
C)increase; dynamic; inject
D)decrease; dynamic; drain

Question

Quizplus · Accepted Answer

When Treasury deposits at the Fed increase, it reduces reserves in the banking system. To counteract this and maintain reserve levels, the trading desk conducts defensive open market operations to inject reserves.

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