The type of open-market operation that brings about a temporary change in the level of reserves held by depository institutions is known as a(n):
A) Outright or straight transaction
B) RP or Reverse RP transaction
C) Bills only transaction
D) Reserve multiplier transaction
E) None of the above

Question

Quizplus · Accepted Answer

RP (Repurchase Agreement) or Reverse RP transactions are used by central banks to manage the money supply and banking reserves on a short-term basis, thus temporarily changing the level of reserves held by depository institutions.

The Type of Open-Market Operation That Brings About a Temporary