The Fed can offset the effects of an increase in float by engaging in
A)a repurchase agreement.
B)a matched sale-purchase transaction.
C)an interest rate swap.
D)an open market purchase.

Question

Quizplus · Accepted Answer

A matched sale-purchase transaction, also known as a reverse repurchase agreement, is used by the Fed to temporarily drain reserves from the banking system, offsetting the increase in float.

The Fed Can Offset the Effects of an Increase in Float