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The Central Bank & Monetary Policy · Question 38 of 58

Question 38

MediumOriginal question

Read the two statements and choose the correct option.

I. Open market operations are a quantitative tool of monetary policy.

II. Open market operations change the amount of reserves in the banking system.

Options for question 38

Show the answer and explanation
CorrectNot quiteAnswer C

Correct answer: C

Explanation

  1. OMOs change the total volume of credit, so they are quantitative. I is true.

  2. Purchases add reserves and sales remove them. II is true.

Concept
OMOs as a tool
Typical time
70 s
Your time
—
The rule this testsOpen market operations
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