Author Question: When the Fed purchases government securities, it: a. increases banks' reserves and makes possible ... (Read 23 times)

folubunmi · **on:** Jun 30, 2018

When the Fed purchases government securities, it:
a. increases banks' reserves and makes possible an increase in the money supply.
b. decreases banks' reserves and makes possible a decrease in the money supply.
c. automatically raises the discount rate.
d. uses discounting operations to influence margin requirements.
e. has no effect on either the money supply or the discount rate.

Question 2

When the Fed conducts open market operations, it buys and sells:
a. stocks.
b. government securities.
c. foreign currency
d. gold.