Reverse repurchase agreements are often used to
A) increase bank reserves permanently.
B) increase bank reserves temporarily.
C) reduce bank reserves permanently.
D) reduce bank reserves temporarily.

Question

Quizplus · Accepted Answer

Reverse repurchase agreements involve the temporary sale of securities by banks to the Federal Reserve, with the agreement to buy them back at a later date. This reduces bank reserves temporarily, as banks are receiving cash in exchange for securities.

Reverse Repurchase Agreements Are Often Used to