SIE Exam Question 772: Answer and Explanation

Question: 772

Which of the following is correct regarding open market operations?

• A. It is a tool used by the Federal Reserve to implement monetary policy.
• B. It is conducted by the Trading Desk at the Federal Reserve Bank of New York.
• C. The authority to conduct open market operations is found in Section 14 of the Federal Reserve Act.
• D. All of the above are correct.

Correct Answer: D

Explanation:

Open market operations is a tool used by the Federal Reserve to implement monetary policy. It is conducted by the Trading Desk at the Federal Reserve Bank of New York, and the authority to conduct open market operations is found in Section 14 of the Federal Reserve Act.