In which situation might the federal reserve buy open market operations or lower its discount rates

Business

1 answer:

Effectus [21]3 years ago

7 0

Answer:

In times of economic downturns to stimulate growth

Explanation:

Open market operations are one of the monetary policies used by the Fed to regulate the money supply in the economy. They involve buying and selling treasury bills to the banks and other financial institutions. Open marker buys, and lowering of interests are expansionary policies used to stimulate economic growth.

By buying treasury bills, the Fed adds money to the banks. Banks exchange treasury bills for liquid cash. As a result, banks end up with excess money in their custody. To make profits, the bank lends out this money to firms and individuals at competitive rates. The availability of easy and low-interest credit encourages borrowing for investments and consumption. Increased economic activities accelerated economic growth. Lowering of discount rates makes loans cheaper, thereby encouraging borrowing.

You might be interested in

The stated interest rate is the rate quoted in the bond contract used to calculate the cash payments for interest.

Drupady [299]

That statement is true

A stated interest rate is the return of investment that is not compounded by the interest accumulation throughout the years.
In general, a stated interest rate will give us a lower amount of return compared to effective annual interest rate that compound the accumulation throughout the years,

8 0

4 years ago

What are the advantages of electronic communication

fiasKO [112]

Answer:

IT HEPLS TO SOLVE ECONOMIC PROBLEMS ABOUT TRADITIONAL SUPERSTATION

5 0

3 years ago

Read 2 more answers

Salespeople at Janie's Cookie Company want to draw the attention of their customers through blogs, Twitter, and LinkedIn, rather

Serga [27]

Answer:

D. Inbound Marketing

Explanation:

When a company uses blogs and social media, to draw the customers through content. And this is called Inbound Marketing, a passive, subtle and digital way to market.

7 0

3 years ago

U.S. cola companies entered the global market because of:

STatiana [176]

Answer:

C. limited growth opportunities in their domestic market.

Explanation:

U.S. cola companies entered the global market because of limited growth opportunities in their domestic market.

6 0

3 years ago

Financial statement auditors provide some degree of assurance that financial statements are free of material misstatement. Many

sineoko [7]

Answer:

First of all, an auditor must be skeptical about the information that he/she is gathering and analyzing. They should try to get as much audit evidence as they can in order to form an opinion. But an auditor can also reasonably assure that there are no material misstatements, either intentional or not intentional.

Most auditor procedures are intended to discover unintentional misstatements, but intentional misstatements are very hard to discover because more than one individual (or even a very large group) might have colluded in order to conceal them. The auditor gets his information from the controller, internal auditor, and other people within the organization, but what if they all colluded in order to conceal their bad actions.

E.g. an auditor should check for shipping receipts to be complete, accurate and in order, but he/she relies on information given by the same people that he/she is evaluating. The auditor can conclude that the shipping reports are complete, but he/she cannot state that they are true and valid because he/she wasn't there.

3 0

3 years ago