Monetary Policy (MBA-501)
Essay specific features


Written by:
Norma W
Date added:
August 7, 2016
Level:
University
Grade:
B
No of pages / words:
5 / 1223
Was viewed:
5287 times
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Essay content:
The Fed's Open-market operations consist of the buying of government bonds from, or the selling of government bonds to, commercial banks and the public. Open-market operations are Fed's most important instrument for influencing the money supply (McConnell-Brue, 2004, p.270). When Federal Reserve purchase government bonds or securities from commercial banks, increase the reserves of the commercial banks, then increases the lending ability of the commercial banks and they sell the securities, decrease the reserves of the commercial banks...
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When Federal Reserve purchase government bonds or securities from commercial banks, increase the reserves of the commercial banks, then increases the lending ability of the commercial banks and they sell the securities, decrease the reserves of the commercial banks. Buying bonds increases the reserve banks will hold, this enables banks to lend more money and they can reduce lower interest rates while selling bonds effect higher interest rates and lower bond prices in the market...
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