Open Market Operations Is a tool of monetary policy in which the Federal Reserve buys and sells.
Further Explanation:-
The Monetary policy refers to the Federal Reserve and nation’s central bank. The Federal Reserve sells and buys treasury securities of United States to the open market in order to regulate the supply of all the money which is deposited in the banks of United States and because of this they are able to loan out or lend money loan to the customers who require loan for some work. In order to do that, it purchases treasury securities to increase the flow of money and sells them in order to reduce the supply of money. The federal fund rate is the interest rate that the bank applies on the customer over that loan. The constant flow of money in the banking system allows banks to keep its federal reserve high enough so that it meets the demands of the customers by putting excess cash in the banking system for customers to use. As a result of this process, sometimes loans get harder to get as they are more expensive on interest rates and sometimes it is easier to get on less interest rates because of excessive cash flow in the system. Open Market Operations Is a tool of monetary policy in which the Federal Reserve buys and sells.
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Answer Details:
Grade – High School
Subject – Economy
Chapter – Open market operations
Keywords – Open market operations, Federal Bank, National bank, Cash flow, Interest, Money, banking, Treasury, Supply, Flow, Loan.
