When the Fed forecasts a sustained increase in the demand for the monetary base, the staff of the Fed is likely to meet this demand through:

Question

Quizplus · Accepted Answer

When the Fed forecasts a sustained increase in the demand for the monetary base, the staff of the Fed is likely to meet this demand through an outright purchase of U.S. Treasury Securities. This purchase injects money into the economy and increases the monetary base. Discount loans and repurchase agreements are short-term funding mechanisms, while an outright sale of U.S. Treasury Securities would decrease the monetary base.

When the Fed Forecasts a Sustained Increase in the Demand