Question

The group that is responsible for the buying and selling of government securities (treasury bills, notes, and bonds) as a tool of monetary policy is:

Group of answer choices

the Federal Open Market Committee (FOMC).

the Congressional Banking and Securities Committee.

the Federal Advisory Council.

the Council of Economic Advisors.

Answer 1

The main monetary tools of Federal reserve banks are-

Discount rate

Required reserves

Open market operations

If the goal of Federal reserve is to increase or decrease the money supply then it buys or sells the Government bonds in open market operations

This is also called expansionary and contractionary monetary policy

If the goal is to increase the money supply then Federal Bank purchases government securities and lowers the discount rate which increases more money in the commercial banking and more money available for investment and other purpose

Opposite to it is when the goal is to decrease the money supply given by option A

Federal advisory committee main purpose is for organising open meetings, involvement, reporting etc

Council of economic advisors main purpose is to advise the president of United States informing or regulating the economic policy

Answer is option A