Open market operations
A) are used infrequently
B) are a prime source of income for the U.S. economy
C) are used by the Fed to alter bank reserves
D) are used by the Fed to issue securities

Question

Quizplus · Accepted Answer

Open market operations are the primary tool used by the Fed to alter the amount of reserves held by banks. Through the purchase or sale of government securities, the Fed can inject or withdraw reserves from the banking system, thereby influencing interest rates and the broader economy. Open market operations are used frequently and are an important part of the Fed's monetary policy toolkit. They are not a source of income for the U.S. economy and are not used by the Fed to issue securities.

Open Market Operations