When it wants to change interest rates, the Federal Reserve (Fed) buys or sells government securities,...
When it wants to change interest rates, the Federal Reserve (Fed) buys or sells government securities, which is referred to as open market operations. If the Fed wants to decrease interest rates, it should ________ government securities.
a. buy
n. neither buy or sell
c. sell
d. decrease the taxes investors pay on their investments
Homework Answers
| Answer : Option a [ Buy ] |
| Explanation : When the Fed wants to decrease the interest rate, it buys the government securities so that the money flow in the economy can be increased. This is done during recession. |
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When it wants to change interest rates, the Federal Reserve
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When the Federal Reserve conducts open market operations, it buys or sells government bonds. buys and sells foreign currency. manipulates of the rate at which it loans to member banks. increases or decreases the required reserve ratio. How will the Fed's policy action change the money supply? Use only the actions corresponding to your choice in the previous part. The money supply increases The money supply decreases Answer Bank Answer Bank The Fed sells foreign currency The Fed buys bonds...
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