Question

The monetary policy tool whereby the Federal Reserve buys and sells government bonds is called: the discount rate. open-market operations. reserve requirements. moral suasion.

Answer 1

The monetary policy tool whereby the Federal Reserve buys and sells government bonds is called (B) open-market operations.

What are open-market operations?

• An open market operation (OMO) is a macroeconomic activity in which a central bank provides (or withdraws) liquidity in its currency to (or from) a bank or group of banks.
• Open-market operations are the monetary policy tool through which the Federal Reserve buys and sells government bonds.
• The central bank can either buy or sell government bonds (or other financial assets) in the open market (hence the name) or, in what is now the preferred solution, enter into a repo or secured lending transaction with a commercial bank.
• The central bank gives the money as a deposit for a defined period while simultaneously taking an eligible asset as collateral.

As the definition says, open-market operations are the monetary policy tool through which the Federal Reserve buys and sells government bonds.

Therefore, the monetary policy tool whereby the Federal Reserve buys and sells government bonds is called (B) open-market operations.

Know more about open-market operations here:

brainly.com/question/14256204

#SPJ4

Complete question:

The monetary policy tool whereby the Federal Reserve buys and sells government bonds is called:

(A) the discount rate.

(B) open-market operations.

(C) reserve requirements.

(D) moral suasion.