An "open market operation" is said to occur when the Fed
A) arranges for the merger of two banks.
B) changes the interest rate at which it lends reserves.
C) transfers reserves between banks.
D) buys or sells government securities.

Question

Quizplus · Accepted Answer

An open market operation refers to the buying or selling of government securities by the Federal Reserve in the open market. This can impact the level of reserves in the banking system, which can in turn affect interest rates and the overall economy. A, B, and C are not considered open market operations.

An "Open Market Operation" Is Said to Occur When the Fed