How does the Fed acquire its holdings of securities?
A)Through open market operations
B)As a result of defaults by banks on discount loans
C)As contributions by the U.S. Treasury aimed at enabling the Fed to meet its operating expenses
D)As contributions by member banks when they first join the system

Question

Quizplus · Accepted Answer

The primary way the Federal Reserve acquires its holdings of securities is through open market operations, in which the Fed buys or sells government securities on the open market to adjust the money supply, influence interest rates, and pursue its monetary policy objectives. The other answer choices are not accurate ways the Fed acquires its securities.

How Does the Fed Acquire Its Holdings of Securities