Unformatted text preview: 3. Open market operations: open market refers to 20 dealer firms(wall street) markets refers to the fed buying and selling US government securities(treasury bills, notes, bonds) Selective credit control; selecting a sector to control For example: In ASIA they usually control the import and export sector and leave consumer spending alone Stock market marginal requirement **Marginal requirement tells the bank what percent of stocks the bank can use For example: if I was to go into a bank for a $100,000 loan to purchase stocks and as a collateral I tell the bank that they can take the stocks than they will tell me that they can only use 50% of the stocks and thus they can only lend me $50,000 and I have to come up with the other half “QUANTATIVE EASING”- WHEN THE FED GOES INTO THE MARKET AND BUYS FINANCIAL ASSETS...
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- Fall '11
- Monetary Policy, Fed, reserve requirements, monetary policy tools, Federal Reserve charges