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: -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-2: -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-3: -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-4: -Buying and selling of government securities by the central bank from or to the public and banks are known as open market operations.