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Question
the feds use of open market operations affects banks
○ interest rates.
○ money available to lend.
○ lending practices.
○ stability.
Open market operations (OMO) by the Federal Reserve involve buying or selling government securities. When the Fed buys securities, it injects reserves into banks, increasing the money banks have available to lend. When it sells, it reduces those reserves. Interest rates are affected indirectly, lending practices relate more to bank policies, and stability is a broader outcome. So the key direct impact on banks from OMO is the money available to lend.
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B. money available to lend.