Question

By _________ government bonds, the Federal Reserve absorbs excess liquidity to the market.

Answer 1

Through open market operations, the Federal reserve buys and
sells government securities in order to expand or contract the
amount of money in the banking system.
The Federal reserve expands the economy by expanding the amount of money in the banking system.
The Federal reserve purchases government bonds from the banks in order to expand the economy.
The Federal reserve contracts the economy by contracting the amount of money in the banking system.
The Federal reserve sells government bonds to the banks in order to contract the economy and control inflation.
Be SELLING government bonds, the Federal reserve absorbs excess liquidity to the market.