.18. Buying and selling of government securities by the central bank from the public and banks is known as: A. Reverse repo rate B. Repo rate C. Open market operations D. Cash reserve ratio. Select one and explain
Q.18. Buying and selling of government securities by the central bank from the public and banks is known as:
A. Reverse repo rate
B. Repo rate
C. Open market operations
D. Cash reserve ratio.
Select one and explain
The Federal Reserve's purchases and sales of securities on the open market are referred to as "open market operations" (OMO) (Fed). The Fed runs open market operations to control the amount of money held in reserve by American banks. Treasury securities are bought by the Fed to boost the money supply and sold to decrease it.
The federal funds rate, which affects other short-term, long-term, and foreign exchange rates, can be changed by the Fed using OMO. This may alter the quantity of money and credit accessible to the economy and have an impact on a number of economic variables, including output, unemployment, and the price of goods and services.
Step by step
Solved in 3 steps
