Government securities are the debts of the United States government. When the Federal Reserve sells securities it has a negative effect on the economy. This reduces the amount of money available for loans causing the economy to tighten. The opposite is true when the Federal Reserve buys securities. This gives the Federal Reserve more money to loan to other banking institutions...
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The opposite is true when the Federal Reserve buys securities. This gives the Federal Reserve more money to loan to other banking institutions. Having more money relieves the strain on the economy (Federal Reserve Bank of Richmond, 2006). Open market operations help the Federal Reserve to control inflation and recession levels...