Asked by Bryan Velasquez Beltran on Jun 20, 2024
Verified
Which statement is true?
A) The Federal Reserve buys nearly all its United States government securities directly from the Treasury.
B) Open market operations are the buying and selling of United States government securities in the open market by the Federal Reserve.
C) The least important policy tool used by the Federal Reserve to control the money supply is open market operations.
D) None of the choices/statements are true.
Open Market Operations
The buying and selling of government securities by a central bank to control the money supply and interest rates in the economy.
Federal Reserve
The central banking system of the United States, responsible for conducting national monetary policy and overseeing financial institutions.
- Identify the instruments used by the Federal Reserve for conducting monetary policy, including open market operations, reserve requirements, and the discount rate.
Verified Answer
AO
Aurelia OridaJun 22, 2024
Final Answer :
B
Explanation :
Open market operations are the primary tool used by the Federal Reserve to control the money supply. These operations involve the buying and selling of United States government securities in the open market, with the goal of increasing or decreasing the money supply in the economy. The Federal Reserve can buy these securities directly from the Treasury or from other investors in the open market.
Learning Objectives
- Identify the instruments used by the Federal Reserve for conducting monetary policy, including open market operations, reserve requirements, and the discount rate.