Open Market Operations

question 31

Multiple Choice

Open market operations

• A) lack flexibility because only very small purchases or sales may be carried out in any given month.
• B) lack flexibility because open market purchases cannot easily be offset by subsequent open market sales.
• C) are more flexible than other traditional policy tools.
• D) may be carried out only on the third Friday of each month.

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Definitions:

Interest Rate

The percentage of a sum of money charged for its use, typically expressed as an annual percentage.

Economic Profit

The difference between a firm's total revenue and its opportunity costs, including both explicit and implicit costs.

Savings Account

A deposit account held at a bank or financial institution that provides principal security and a modest interest rate.

Interest Rate

The percentage of a sum of money charged for its use, often expressed annually.