If the central bank buys financial securities in the open market to increase the monetary base, this is and example of ?
Correct answer: C. Open Market operations
- A. lender of less resort
- B. financial intermediation
- C. Open Market operations
- D. Financial regulation
Explanation
Open-market operations are central-bank purchases or sales of government securities. Buying securities injects reserves into the banking system and increases the monetary base.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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