The Type of Open Market Operation Intended to Offset Movements

question 40

Multiple Choice

The type of open market operation intended to offset movements in other factors that affect reserves and the monetary base is

• A) the dynamic open market operations.
• B) the defensive open market operations.
• C) the reserve requirements.
• D) market equilibrium.

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Definitions:

Money Supply

The overall pool of financial assets in an economy at a given stage.

Leverage Ratio

A financial metric measuring the amount of debt used by a company to finance its assets relative to the value of those assets.

Insolvent

Insolvent refers to the inability of an individual or organization to meet its financial obligations as they become due, due to a lack of sufficient assets.

Reserve Requirements

Regulations set by the central bank determining the minimum amount of reserves each bank must hold against deposits.