When the Fed Uses OMO to Offset Changes in the MB

question 46

Multiple Choice

When the Fed uses OMO to offset changes in the MB due to outside factors, its action is said to be

• A) compensating.
• B) demand driven.
• C) dynamic.
• D) none of the above.

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Definitions:

360-Day Year

A financial convention or simplification to treat all months as 30 days in duration for the ease of interest calculations and financial analysis.

Commission

A fee or percentage of a sale paid to an employee or agent for facilitating or completing a sale.

Semiannually

Happening semiannually; every six months.

360-Day Year

An accounting concept that simplifies interest calculations by using thirty-day months across a full year.