ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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buying and selling of U.S. government bonds and treasury bills
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buying and selling of stock
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Either A or B
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None of the above
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Detailed explanation-1: -What are Open Market Operations? The selling and buying of Treasury Bills and other Government Securities by a country’s Central Bank in order to control the amount of money in the economy are known as open market operations.
Detailed explanation-2: -Open market operations (“OMOs”) are the central bank’s primary tool of monetary policy. If the central bank wants interest rates to be lower, it buys bonds. Buying bonds injects money into the money market, increasing the money supply.
Detailed explanation-3: -The term refers to a central bank buying or selling securities in the open market to influence the money supply. The Fed uses open market operations to manipulate interest rates, starting with the federal funds rate used in interbank loans.
Detailed explanation-4: -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-5: -Open market operations refer to central bank purchases or sales of government securities in order to expand or contract money in the banking system and influence interest rates.