The Fed Accidentally Discovered Open Market Operations When

question 1

Multiple Choice

The Fed accidentally discovered open market operations when

• A)it came to the rescue of failing banks in the early 1930s,and found that its purchases of bank loans injected reserves into the banking system.
• B)it purchased securities for income following the 1920-1921 recession.
• C)it attempted to slow inflation in 1919 by selling securities and found that its sales drained reserves from the banking system.
• D)it reinterpreted a key provision of the Federal Reserve Act.