Q394
Instrument used by Federal Reserve to smooth money supply and interest rates includes
A.
treasury notes
B.
repurchase agreements
AnswerC.
commercial payable notes
D.
commercial receivable notes
Answer: Option B
Solution
Answer: Option B
Solution:
Instrument used by Federal Reserve to smooth money supply and interest rates includes repurchase agreements. A repurchase agreement (repo) is a form of short-term borrowing for dealers in government securities. In the case of a repo, a dealer sells government securities to investors, usually on an overnight basis, and buys them back the following day.