october 18 - Karina Santana DEFENSE using open market...

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Karina Santana October 18, 2011 DEFENSE: using open market operations to offset or nullify undesired changes in the bank reserves + money market caused by actions of: 1. Public 2. BANKS 3.U.S. Treasury EFFECT CASH WITHDRAWAL ON BANK RESERVES *** during November 15 to December 15 there are many withdrawals resulting in $6 billion of reserves decreasing. By January the reserves go up do to many deposits by $6 billion. During the time that the reserves have decreased by $6 billion the Fed will go into the money market and purchase $6 billion worth of securities. So, when the reserves increased in January they will sell $6 billion worth of securities. The buying and selling during this period is called NET EFFECTION RESERVES= Stability. FEDERAL RESERVE FLOAT: the Fed will try to project the float so that they can neutralize it. In order to stabilize the float they will operate in the open market. The goal is to have the federal reserves stable. EX:PROJECTION
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october 18 - Karina Santana DEFENSE using open market...

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