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    Description of The Federal Reserve

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    In principle could the Federal Reserve conduct monetary policy through the purchase and sale of stocks on the New York Stock Exchange? Do you see any possible drawbacks to such a policy.

    Suppose the Federal Reserve purchased gold or foreign currency. How would this purchase affect the domestic money supply?

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    The Federal Reserve has traditionally conducted open market operations through the purchase and sale of government bonds. In principle, could the Federal Reserve conduct monetary policy through the purchase and sale of stocks on the New York Stock Exchange? Do you see any possible drawbacks to such a policy?
    The Federal Reserve, if it purchases stocks there will be a different effect from the effect of selling bonds. First, the government has the power to issue ...

    Solution Summary

    The Federal Reserve is overviewed.

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