Question

Open market operations refer to which action by a central bank?
OA. Regulating the amount of money banks hold in reserve
OB. Changing the price banks pay to borrow money
OC. Adjusting interest rates on stock markets
OD. Buying and selling treasury securities

Answer 1

Final answer:

Open market operations involve buying and selling securities to influence bank reserves and interest rates for monetary policy implementation.

Explanation:

Open market operations (OMOs) refer to the buying and selling of securities by a central bank, such as the Federal Reserve. This tool is used to influence the quantity of bank reserves and interest rates, targeting the federal funds rate. OMOs are crucial in implementing monetary policy and managing the money supply.

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