Open market operations are defined as:
A)purchases of stocks in a stock exchange
B)the purchase or sale of bonds by the Bank of Canada
C)central bank lending to banks
D)the specifying of margin requirements on stock purchases
E)central bank borrowing from banks

Question

Quizplus · Accepted Answer

Open Market Operations refer to the purchases or sales of government securities by the central bank (Bank of Canada in this case) in the open market in order to influence the money supply and interest rates. Therefore, the correct choice is (B) - the purchase or sale of bonds by the Bank of Canada.

Open Market Operations Are Defined As