A repurchase agreement is the same as an open market purchase of Treasury securities.

Question

Quizplus · Accepted Answer

A repurchase agreement (repo) is a short-term loan in which a financial institution, such as a bank, temporarily sells securities to another party with the agreement to repurchase them at a later date. This is different from an open market purchase in which the Federal Reserve directly purchases Treasury securities from the market to increase the money supply.

A Repurchase Agreement Is the Same as an Open Market