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:

Inventory

The complete list of items such as goods, materials, and merchandise that a business holds with the intent to sell.

CPA

Certified Public Accountant, a professional designation given to qualified accountants who have passed a licensing examination in their jurisdiction.

Security Interest

A legal claim on assets which are given to secure a loan and ensure the repayment of debt.

Debtor

A debtor is an individual or entity that owes a debt to another party, usually a sum of money.