If the FOMC decides that the Fed should buy bonds it

Question

Quizplus · Accepted Answer

When the FOMC decides that the Fed should buy bonds, it instructs the New York Federal Reserve Bank's trading desk to conduct the purchase in the open market. The trading desk executes the purchase by buying bonds from banks or other financial institutions, which increases the amount of money in circulation and stimulates economic activity. Therefore, choice A is the correct answer. The other choices are incorrect because the Fed does not need Congress' or the President's permission to buy bonds, nor does it require approval from the Financial Oversight Committee for this type of operation.

If the FOMC Decides That the Fed Should Buy Bonds