What happens when the Federal reserve buys a treasury bond

Business

1 answer:

alukav5142 [94]4 years ago

7 0

Answer:

If the Federal Reserve buys bonds in the open market, it increases the money supply in the economy by swapping out bonds in exchange for cash to the general public. Conversely, if the Federal Reserve sells bonds, it decreases the money supply by removing cash from the economy in exchange for bonds.

You might be interested in

Pharoah Company sells merchandise on account for $3600 to with credit terms of 2/14, n/30. Blue Spruce Corp. returns $600 of mer

aleksandr82 [10.1K]

Answer:

The journal entry to record the merchandise return and the payment should be:

Dr Cash 2,940

Dr Sales discount 60

Dr Sales returns and allowances 600

Cr Accounts receivable 3,000

The second entry must be made to record the increase in inventory:

Dr Merchandise inventory 600

Cr Sales returns and allowances 600

Explanation:

The sales returns and allowances account is used to record returned merchandise, while the sales discount account is used to record discounts for early payments or other types of sales discounts.

3 0

3 years ago

Three-year Treasury securities currently yield 6%, while 4-year Treasury securities currently yield 6.5%. Assume that the expect

Reptile [31]

Answer:

The correct answer is 8%.

Explanation:

According to the scenario, the computation of the given data are as follows:

Let 1 year Treasury securities = t

So, Four year Treasury = [(Yield of 3 years Treasury × No. of year) + ( t × No. of year)] ÷ Number of year

So, by putting the value, we get

6.5% = [(6% × 3) + ( t × 1)] ÷ 4