Open market operations intended to offset movements in noncontrollable factors (such as float)that affect reserves and the monetary base are called
A)defensive open market operations.
B)dynamic open market operations.
C)offensive open market operations.
D)reactionary open market operations.

Question

Quizplus · Accepted Answer

Defensive open market operations refer to activities conducted by the central bank to offset or counteract movements in non-controllable factors that affect reserves and the monetary base, such as fluctuations in float. This helps the central bank maintain control over the money supply and achieve its monetary policy objectives. Dynamic open market operations, on the other hand, are conducted proactively to implement monetary policy decisions, while offensive and reactionary open market operations are not commonly used terms in central banking.

Open Market Operations Intended to Offset Movements in Noncontrollable Factors