By Using Open Market Operations, the Federal Reserve

question 100

Multiple Choice

By using open market operations, the Federal Reserve

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

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Definitions:

Agonist

A chemical or drug that binds to receptors in the brain and causes a reaction, often mimicking the action of naturally occurring substances.

Neuron

A cell of the nervous system responsible for receiving and transmitting information through electrical and chemical signals.

Axon

A long, slender projection of a nerve cell that transmits electrical impulses away from the neuron's cell body to other neurons, muscles, or glands.

Dendrite

A branched, tree-like structure in neurons that receives neural signals from other neurons.