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Sagot :
The open market operation base is the most important monetary policy tool because they are the primary determinant of changes in the monetary base and the main source of fluctuations in the money supply.
What is an Open market operation base?
- The Federal Reserve's practice of purchasing and selling U.S. Treasury securities, as well as other securities, on the open market in order to control the amount of money held in reserve by U.S. banks is known as open market operations (OMO).
- To raise the amount of money in circulation and to lower long-term interest rates, the Fed buys Treasury securities and sells them.
- OMOs aim to influence short-term interest rates and other interest rates by adjusting the level of reserve balances.
- By purchasing or offering to sell government bonds to or from commercial banks, the Federal Reserve conducts open market operations to reach the desired target federal funds rate.
To learn more about the Open market operation base refer to:
https://brainly.com/question/16260032
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