How do open market operations work?
What will be an ideal response?
If the FOMC decides to increase the money supply, it will direct the trading desk at the Federal Reserve Bank of New York to buy U.S. Treasury Securities from the public. When the sellers of these securities deposit the funds from the sale into their banks, the reserves of the banking system will rise. This will start the process of expanding the money supply as the increase in reserves expands loans and checking account deposits. If the FOMC wants to reduce the money supply, it will direct the trading desk to sell U.S. Treasury securities. This will decrease reserves, contract loans, contract checking accounts and shrink the money supply.
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If the quantity of corn is such that the marginal cost of corn is greater than the marginal benefit of corn, then I. there is a deadweight loss. II. more than the efficient quantity of corn is produced
A) Only I is correct. B) Only II is correct. C) Both I and II are correct. D) Neither I nor II is correct.
Options traded on exchanges are known as:
A) listed options B) exchange traded options C) call options D) put options
A major distinction to be made is that deficits count government spending shortfalls ___________, and public debt counts _______________.
A. in a year; the total amount owed from all years B. from all years; the total from a single year C. in real terms; in nominal terms D. as a percentage of GDP; in nominal terms
The study of microeconomics and macroeconomics differ in that
a. microeconomics is concerned with the domestic economy, while macroeconomics is concerned only with the international economy b. microeconomics examines the individual units of the economy, while macroeconomics studies the whole economy c. microeconomics studies the actions of households, while macroeconomics studies the actions of business firms d. microeconomics studies the economy in terms of private individuals and firms, while macroeconomics includes the effect of government e. microeconomics examines the whole economy, while macroeconomics studies the individual units of the economy