By Using Open Market Operations, the Federal Reserve

question 226

Multiple Choice

By using open market operations, the Federal Reserve

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

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Definitions:

Trust Investment

A financial arrangement where assets are managed by one party for the benefit of another under a legally established trust.

Trust Instrument

A legal document that outlines the terms and conditions under which a trust operates, specifying how assets placed in trust are to be managed and distributed.

Corpus

The principal amount in a trust or estate as distinct from interest or dividends earned on that principal amount.

Holographic

Referencing a document, especially a will, entirely written in the handwriting of the person whose signature it bears, often exempt from normally required formalities.