Open-market operations include
A) changes in the reserve ratio.
B) repos and reverse repos.
C) paying interest on excess reserves held at Federal Reserve Banks.
D) changes in the discount rate.

Question

Quizplus · Accepted Answer

Open-market operations refer to the buying and selling of government securities by the Federal Reserve in the open market. This is primarily done through repos and reverse repos, where the Fed either buys or sells securities with the agreement to buy them back or sell them back at a future date. While changes in the reserve ratio, paying interest on excess reserves, and changes in the discount rate are all tools used by the Fed to influence monetary policy, they are not considered part of open-market operations.

Open-Market Operations Include