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 is because by purchasing U.S. Treasury securities, the Fed injects funds into the banking system, which increases the monetary base and helps to meet the demand. This purchase also helps to keep the interest rates low and supports economic growth.

When the Fed Forecasts a Sustained Increase in the Demand