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When the Fed buys government bonds and other securities on the open market?
Open-market operations
The fed buys 5 billion worth of treasury bonds on the open market what effect does this have on the money supply?
The Fed sells $5 billion worth of Treasury bonds on the open market.
An open market sale by the Fed?
open market sale of bonds is retractionary monetary policy and lowers the money supply, this raises the interest rate.
Why does the money supply increase when the fed buy treasury bonds?
In buying the bonds CBN pays cash which goes to other commercial banks and eventually into the open market until the CBN decides to sell and the revers becomes the case.
Which best describes the use of open market operations to influence the money supply?
The Fed buys and sells Treasury bonds in the bond market.
The Fed sells 5 billion worth of Treasury bonds on the open market?
It would stay the same gurrrl
How can FED purchase bond while others are holding it..Shouldn't bond holders have the right to decide whether to sell their bonds or not?
The FED doesn't force people to sell, it just buys from willing sellers in the market.
If the demand for money increases and the fed wants interest rates to remain unchanged what would be an appropriate policy?
Buy bonds in the open market
Fed participation in open market activities?
what is the federal partcipation in open market activities??
What are the three ways the fed can increase money supply?
Open market operations ( purchasing bonds), Discount rates ( lowering the interest rates) and Reserve requirement.
Why in order to reduce the money supply the Fed might sell securities in the open market operations?
Because that is how FED removes money from circulation, thus reducing money supply. The opposite would be buying securities in open market operations in order to increase money supply.
What of the following best explains why the money supply is increased when the Fed buys T-bonds on the open market?
The purchase of bonds increases the amount of deposits in people's bank accounts, which enables banks to loan more money
