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1 year ago

If the Fed buys U.S. government securities from banks, the federal funds rate and banks' reserves .

1 answer:

8 0

If the Fed buys U.S. government securities from banks, the federal funds rate falls and banks' reserves increase.

<h3>Fed's Monetary Policy</h3>

Price stability and full employment, the Federal Reserve's two legally mandated goals, are necessary to ensure a healthy and expanding economy in the United States.
In the past, the Fed has achieved this via modifying reserve requirements, conducting open market operations (OMO), and influencing short-term interest rates.
By acquiring government assets, the Fed helps to boost bank reserves and bring down the federal funds rate. Government securities will be sold by the Fed on the open market.
The Fed reduces the amount of money in circulation by selling government assets, which raises the federal funds rate.
OMO has an impact on interest rates as well because when the Fed purchases bonds, prices are pushed up and rates are lowered; conversely, when the Fed sells bonds, prices are pushed down and rates are raised.

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Because texas generally has low rates of –------ , individual effects on the texas political process are likely to be :______

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<h3>What is texas's political process?</h3>

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The true statement about this natural monopoly is that It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers.

Also, it is a true statement that natural monopolies can earn positive profit in the long run without the government regulation.

<h3>What is a natural monopolies?</h3>

This refers to the type of monopoly that exists in a particular market if a single firm can serve that market at lower cost than any combination of two or more firms.

It mostly occurs when when the most efficient number of firms in the industry is one. Also, a natural monopoly will ideally have very high fixed costs implying that it is impractical to have multiple firms producing the good.

A very good example of a natural monopoly is the case of tap water.

Hence, the true statement about this natural monopoly is that It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers and it is a true statement that natural monopolies can earn positive profit in the long run without the government regulation.

Therefore, the answers are Option B and True.

If the Fed buys U.S. government securities from banks, the federal funds rate ________ and banks' reserves ________.

If the Fed buys U.S. government securities from banks, the federal funds rate and banks' reserves .