Homework SourseOn July 30th 2009 The Federal Reserve through the Federal Re
On July 30th 2009, The Federal Reserve through the Federal Reserve Bank of New York purchased $6.496 billion of Treasury Securities. This open market purchase of securities will:
Shrink the money supply
Increase interest rates to small businesses
C) Increase bank reserves in the Federal Reserve system
D )Increase the debt of the U.S.governmnt
| A) | Shrink the money supply | |
| B) | Increase interest rates to small businesses | |
| C) Increase bank reserves in the Federal Reserve system | ||
| D )Increase the debt of the U.S.governmnt |
Solution
if Federal Bank purchase treasury bill from open market market operationthen this purchase of securities will Increase the money supply in economy. if money supply in economy is increases then interest rate decline in market. if interest rate decline Bank reserve in Federal Reserve sustem increases.
Option (C) is correct answer.
