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in a open market operations the fed buys 15 million of government bonds from individuals what...

in a open market operations the fed buys 15 million of government bonds from individuals what is the results

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*ANSWER ::

=> Fed Means Federal Reserve. It Is US Central Bank Which Is Work To Regulate Banking System And Make US Economy Stable. Fed Regulate Money Supply By The Tool Of Open Market Operation In Which Fed Buy Or Sell Government Securities So Control Money Supply In The Economy.

=> So When Fed Buy 15 Million Government Bonds From Individual So Fed Increase the Money Supply in The Economy. Which means Fed Purchase Government Bonds And Provide Money to The Individual So People Have More Money In Their Hands To spend So It Increase The Liquidity In The Market so Money Supply Increase And When money supply Increase So It Leads To Increase In The Aggregate Demand And AD Cause Increase In The Overall Growth Rate Of The Country.

=> So By Buying Bonds Form The Individual Worth 15 Million It Increase The Money supply Of 15 Million In The Economy. If Fed Want To Decrease The Money supply They Sell The Bonds In The Open Market Operations

Rahul Sunny answered 2 years ago
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