Which of the Following Statements Is Correct

question 77

Multiple Choice

Which of the following statements is correct?

• A)The volume of open market operations is determined jointly by the actions of the Fed, the banking system, and the nonbank public.
• B)The Fed's control over discount lending is more complete than its control over open market operations.
• C)The Fed completely controls the volume of open market operations.
• D)The Fed has complete control over the volume of both discount loans and open market operations.

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Definitions:

Required Reserve Ratio

The fraction of deposits that a bank is required to hold in reserve and not lend out, as mandated by a central banking authority.

Excess Reserves

The reserves that banks hold in excess of the required minimum, often held in the central bank, which can lend them out to generate interest.

New Loans

Any sums of borrowed money that have recently been provided by a lender to a borrower.

Reserve Requirement

The minimum amount of reserves a bank must hold against deposits, set by the central bank, influencing the money supply and banking stability. A rephrased definition since "Required Reserves" is a similar concept.