In a matched sale-purchase transaction, the Fed
A)buys securities from a dealer and the dealer agrees to buy them back.
B)sells securities to a dealer and the dealer agrees to sell them back.
C)buys securities from one dealer and sells the same dollar amount of securities to another dealer.
D)sells securities to one dealer and buys the same dollar amount of securities from another dealer.

Question

Quizplus · Accepted Answer

In a matched sale-purchase transaction, the Federal Reserve sells securities to a dealer with an agreement that the dealer will sell them back to the Fed at a later date. This is a temporary measure to drain reserves from the banking system.

In a Matched Sale-Purchase Transaction, the Fed