The type of open market operation intended to offset movements in other factors that affect reserves and the monetary base is
A) the dynamic open market operations.
B) the defensive open market operations.
C) the reserve requirements.
D) market equilibrium.

Question

Quizplus · Accepted Answer

Defensive open market operations are intended to offset movements in other factors that affect reserves and the monetary base. These operations are essentially defensive in nature and they aim to stabilize the monetary base and maintain the federal funds rate within a certain range. This is done to prevent inflation or deflation from getting out of control due to changes in other factors like currency issuance or movements in the Treasury's account with the Fed.

The Type of Open Market Operation Intended to Offset Movements