ECONOMICS
FEDERAL RESERVE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Central Intelligence Agency
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Federal Bureau of Investigation
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Federal Open-Market Committee
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Department of State
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Detailed explanation-1: -The Fed controls the supply of money by increas-ing or decreasing the monetary base. The monetary base is related to the size of the Fed’s balance sheet; specifically, it is currency in circulation plus the deposit balances that depository institutions hold with the Federal Reserve.
Detailed explanation-2: -The Federal Reserve buys and sells government securities to control the money supply and interest rates. This activity is called open market operations.
Detailed explanation-3: -By buying or selling bonds, bills, and other financial instruments in the open market, a central bank can expand or contract the amount of reserves in the banking system and can ultimately influence the country’s money supply. When the central bank sells such instruments it absorbs money from the system.
Detailed explanation-4: -Open market operations are the buying and selling of government securities to alter the money supply.