Which of the following is true of open market operations?Select the correct answer below:Open market operations involves the buying and selling of stocks on the New York Stock ExchangeOpen market operations target the amount of currency in the market.Open market operations involve the purchase and sale of government securities.Open market operations is the process of changing the reserve ratio in the banking system.
Question
Which of the following is true of open market operations?Select the correct answer below:Open market operations involves the buying and selling of stocks on the New York Stock ExchangeOpen market operations target the amount of currency in the market.Open market operations involve the purchase and sale of government securities.Open market operations is the process of changing the reserve ratio in the banking system.
Solution
The correct answer is: Open market operations involve the purchase and sale of government securities.
Open market operations are the actions taken by central banks to manage the supply of money in an economy. These operations involve the purchase and sale of government securities. The central bank buys government securities to increase the money supply and sells them to reduce the money supply. This is a key tool used by central banks to implement monetary policy and control inflation.
The other options are incorrect. Open market operations do not involve the buying and selling of stocks on the New York Stock Exchange, they do not directly target the amount of currency in the market, and they are not the process of changing the reserve ratio in the banking system.
Similar Questions
Open market operation is a) Buying and selling of currency by the central bank b) Buying and selling of securities by the central banks c) Buying and selling of securities by the commercial banks d) Buying and selling of foreign exchange by the central bank
'Open market operations' refers to the buying and selling of ________ by the ________ to affect the level of liquidity in the economy. a. government securities; Australian Treasury b. shares and private bonds; Australian Treasury c. shares and government bonds; Reserve Bank of Australia d. government securities and private bonds; Reserve Bank of Australia
explain the open market operation more
Open-market operations consist of the buying and selling of Blank______.Multiple choice question.international currencycommercial papercorporate stocksgovernment bonds
How does the Fed complete open-market operations?Multiple choice question.By buying and selling bonds in private marketsBy buying and selling bonds in public marketsBy buying and selling stocks in private marketsBy buying and selling stocks in public markets
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.