Question

What are the roles of the FED's (Federal Reserve) trading desk?

What are the roles of the FED's (Federal Reserve) trading desk?

Homework Answers

Answer #1

Fed trading desk use open market operations to change the money supply in the econom by trading government securities and bonds in the market. They buy bonds from the market in exchange of money to raise the money supply in the economy. This policy is known as expansionary monetary policy. They sell bonds in the market in exchange of money to absorb all extra cash from the economy to reduce the money supply. This policy is known as contractionary monetary policy.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
When the New York Fed's trading desk sells government securities in the open market, there is...
When the New York Fed's trading desk sells government securities in the open market, there is -increase in the federal funds rate -no change in the federal funds rate -increase in the discount rate -decrease in the discount rate
Suppose the Federal Reserve (Federal Reserve (Fed)) gave First National Bank (FNB) a $ 10 million...
Suppose the Federal Reserve (Federal Reserve (Fed)) gave First National Bank (FNB) a $ 10 million rediscount loan by increasing the bank's Fed account. a) Show the effect of this transaction on the FNB balance sheet. Note that the deposits held by banks at the Fed are part of the bank reserve. B) Assume that the FNB does not have excess reserves before receiving the rediscount loan. How much of the FNB $ 10 million can you loan? C) What...
What is the purpose (mandate) of the federal reserve bank? What does the federal reserve bank...
What is the purpose (mandate) of the federal reserve bank? What does the federal reserve bank do? How does the federal reserve bank carry out its function?
The FOMC has instructed the FRBNY Trading Desk to purchase $360 million in U.S. Treasury securities....
The FOMC has instructed the FRBNY Trading Desk to purchase $360 million in U.S. Treasury securities. The Federal Reserve has currently set the reserve requirement at 6 percent of transaction deposits. Assume U.S. banks withdraw all excess reserves and give out loans. a. Assume also that borrowers eventually return all of these funds to their banks in the form of transaction deposits. What is the full effect of this purchase on bank deposits and the money supply? b. What is...
The FOMC has instructed the FRBNY Trading Desk to purchase $770 million in U.S. Treasury securities....
The FOMC has instructed the FRBNY Trading Desk to purchase $770 million in U.S. Treasury securities. The Federal Reserve has currently set the reserve requirement at 10 percent of transaction deposits. Assume U.S. banks withdraw all excess reserves and give out loans. a. Assume also that borrowers eventually return all of these funds to their banks in the form of transaction deposits. What is the full effect of this purchase on bank deposits and the money supply? b. What is...
The Federal Reserve System (called “the Fed”) serves at the Central Bank of the United States....
The Federal Reserve System (called “the Fed”) serves at the Central Bank of the United States. It is responsible for setting and carrying out monetary policy. Congress established the Fed and allows it to operate autonomously, at least with respect to setting and carrying out monetary policy on a day-to-day basis. This autonomy allows the Board of Governors and the Federal Open Market Committee (FOMC) to quickly respond to economic and financial industry problems and take timely action. It also...
The FOMC has instructed the FBRNY Trading Desk to purchase $480 million in US Treasury securities....
The FOMC has instructed the FBRNY Trading Desk to purchase $480 million in US Treasury securities. The Federal Reserve has currently set the reserve requirement at 6 percent of transaction deposits. Assume US banks withdraw all excess reserves and give out loans. A. Assume that borrowers eventually return all of these funds to their banks in the form of transaction deposits. What is the full effect of this purchase on bank deposits and the money supply? ___ in bank deposits...
What happens to the federal funds rate when the Federal Reserve decreases the reserve requirements?Draw the...
What happens to the federal funds rate when the Federal Reserve decreases the reserve requirements?Draw the graph and explain what happens to the federal funds rate.
Which of the following is not a fundamental function of the Federal Reserve? 1. Conduct the...
Which of the following is not a fundamental function of the Federal Reserve? 1. Conduct the nation's monetary policy. 2. Provide an effective payments system. 3. Regulate banking operations. 4. Ensure bank profitability. 5. All of the above are fundamental functions of the Federal Reserve. QUESTION 2 Which of the following is not one of the Fed's monetary policy tools? 1. Open market operations 2. Changes in the fed funds rate 3. Changes in the discount rate 4. Changes in...
Please describe the goals and objectives of the Federal Reserve? If the Federal Reserve does not...
Please describe the goals and objectives of the Federal Reserve? If the Federal Reserve does not control our country's money supply who does? Please explain. What is meant by the term Quantitative Easing and state whether it is used by the federal government or Federal Reserve?