By Using Open Market Operations, the Federal Reserve

question 126

Multiple Choice

By using open market operations, the Federal Reserve

• A) adjusts the supply and demand of reserves to keep the Federal funds interest rate equal to its target.
• B) controls banks' demand for reserves, thereby keeping the Federal funds rate equal to its target.
• C) adjusts the demand of reserves to keep bank rates in line with the Federal funds rate target.
• D) adjusts the supply of reserves to keep the Federal funds interest rate equal to its target.

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