Which of the following statements is correct?
A)The volume of open market operations is determined jointly by the actions of the public, banks, and the Fed.
B)The volume of open market operations is determined jointly by the actions of banks and the Fed.
C)The volume of open market operations is determined jointly by the actions of the public and the Fed.
D)The volume of open market operations is determined solely by the Fed.

Question

Quizplus · Accepted Answer

The volume of open market operations is solely determined by the Fed. The Fed decides how much to buy or sell in the open market, which in turn affects the reserves held by banks and the money supply available to the public. The public and banks may respond to these actions, but they do not determine the volume of open market operations themselves.

Which of the Following Statements Is Correct