1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
yan [13]
3 years ago
8

What are governments bonds? Why are banks willing to buy government bonds from the federal reserve?

Social Studies
2 answers:
TEA [102]3 years ago
6 0
The Fed's<span> main tool for controlling the money supply and influencing interest rates is called open market operations: the sale and </span>purchase<span> of U.S. </span>government bonds<span> by the </span>Fed<span> in the open market. ... Because member </span>banks<span> receive cash from the sale of the </span>bonds<span>, they increase their </span>reserve<span> balances when they sell them.
</span>
A government bond is a debt security issued by a government<span>to support </span>government spending. Federal government bonds in the United States include savings bonds, Treasury bonds<span> and Treasury inflation-protected securities<span>....


</span></span>
RoseWind [281]3 years ago
5 0
1. Government bonds are bonds that are issued by the national government, these bonds usually pay periodic interests and they are repay at face value on the maturity date. Example of government bonds are saving bond and treasury notes. Different government bond has different maturity duration, this can be two, three, five or ten years.

2. Banks are willing to buy government bonds from the federal reserve because THEIR RESERVE BALANCE WILL INCREASE WHEN THEY SELL THE BONDS, thus injecting more money into the banking system.
The federal reserve may decide to sell or buy government bonds from commercial banks. Federal reserve use this move to regulate the amount of money that is available to the banks and ultimately to the society. When banks buy government bonds, their reserve balance decreases, but this is only for sometimes, because, they will make more money in return when they sell these bonds, thus increasing their reserve balance.
You might be interested in
There have been a number of amendments added to the Constitution of the United States that deal with voting. The 15th Amendment
frez [133]

Answer:

the 15th Amendment denied states the right not let men of race, color vote. Women didn't get the right to vote till the 19th Amendment

Explanation:

8 0
3 years ago
How can a bill gain support in Congress?
aniked [119]

Answer:

Representatives usually sponsor bills that are important to them and their constituents.

Representatives who sponsor bills will try to gain support for them, in hopes that they will become laws.

Two or more sponsors for the same bill are called co-sponsors.

5 0
2 years ago
Read 2 more answers
What companies have an ethical problem of interest?
neonofarm [45]

Answer:

Wells Fargo

Volkswagen

Ferrero USA.

Coca Cola

just look it up on theres a list

Explanation:

3 0
3 years ago
Which of the following best explains how bondholders and banks serve a simliar function
Andrej [43]
Of the following what? x
4 0
3 years ago
Read 2 more answers
Who was the Germanic General that seized control of Rome?
gayaneshka [121]
The Germanic General that seized control of Rome was Odoacer
3 0
3 years ago
Read 2 more answers
Other questions:
  • The established cross-cultural correlation linking an increase in poverty in a community or country to an increase in violent cr
    7·1 answer
  • Property crimes come in many forms. obtaining goods by false pretenses is a form of theft that involves larceny . if you know th
    15·1 answer
  • Which of the following to the most common type of numeral system used in the world today?
    5·2 answers
  • With a new sense of national unity, James Monroe’s presidential term was described as the _____.
    15·1 answer
  • When we say that the United States Constitution is the "supreme law of the land" what do we mean?
    7·2 answers
  • Somebody please help :(
    15·2 answers
  • Consumer-protection regulations are beneficial because they increase what?
    15·1 answer
  • Who wrote the screenplay for sense and sensibility
    15·1 answer
  • Vai trò của chủ nghĩa duy tâm trong đời sống xã hội?
    8·1 answer
  • If a structural surplus exists but the government's budget is balanced, then ______.
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!