Problemas
4. The Federal Reserve conducts open market operations by A. buying and selling Theasury securities to influence the discount rate. B. buying and selling Treasury securities to influence the federal funds rate. C. buying and selling of Treasury securities to influence the prime rate. D. buying and selling stocks in the market to influence the stock market.
Roztwór
Nadia
professionell · Tutor durante 6 años
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(386 Votos)
Respuesta
The correct answer is B. The Federal Reserve conducts open market operations by buying and selling Treasury securities to influence the federal funds rate.Open market operations are a key tool used by the Federal Reserve to manage the money supply and influence interest rates in the economy. By buying and selling government securities, such as Treasury bonds and bills, the Fed can increase or decrease the amount of reserves held by banks, which in turn affects the federal funds rate - the interest rate at which banks lend to each other overnight.The federal funds rate is a crucial benchmark for many other interest rates in the economy, including the prime rate. By targeting the federal funds rate through open market operations, the Fed can influence the overall level of economic activity and inflation.The other options are incorrect:A. The Fed does not directly influence the discount rate through open market operations. The discount rate is the interest rate the Fed charges banks for borrowing directly from the central bank.C. The Fed does not directly influence the prime rate through open market operations. The prime rate is the interest rate that banks charge their most creditworthy customers, and it is influenced by the federal funds rate.D. The Fed does not buy and sell stocks in the market to influence the stock market. The Fed's open market operations are limited to government securities, not stocks.