Economics Bonds Questions
The role of the Federal Reserve in bond markets is to conduct open market operations, which involve buying and selling government bonds. This is done to influence the money supply and interest rates in the economy. By buying bonds, the Federal Reserve injects money into the economy, increasing the money supply and lowering interest rates. Conversely, by selling bonds, the Federal Reserve reduces the money supply and raises interest rates. These actions help the Federal Reserve in implementing monetary policy and managing the overall economy.