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Sagot :
The choice (i) is correct. The Federal Reserve raises borrowing costs in order to reduce the economy's money supply. Therefore, the Fed advises selling government securities on the open market, which removes market liquidity and reduces the money supply.
The Federal Reserve oversees the economy and makes decisions based on various economic cycles and fluctuations. In this case, the Fed employs monetary policy.
What exactly does the Federal Reserve do?
In order to support a robust economy for U.S. households, communities, and businesses, the Federal Reserve keeps an eye on the risks to the financial system and participates both domestically and internationally.
To learn more about Federal Reserve here
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Full Question = In the short run, if the Fed wants to raise the federal funds rate, it:
(i) instructs the New York Fed to sell government securities in the open market.
(ii) instructs the New York Fed to sell government securities in the foreign exchange market.
(iii) instructs the New York Fed to buy government securities in the open market.
(iv) instructs large commercial banks to sell government securities in the open market.
(v) tells large commercial banks to raise their interest rates.
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