Question

A surplus of funds in the money market can be addressed by the Federal Reserve ___________ bonds to promote deletions from the supply of money.

Answer 1

Answer: Selling

Step-by-step explanation:

If the federal sells bonds, it results in the decrease of money supplied through the removal of cash from the economy as an exchange for bonds.

When the federal buy bonds in an open market, it leads to increase in the supply of money in the economy through swapping of bonds in exchange for cash to benefit the public.

Answer 2

Selling

Step-by-step explanation:

The Federal Reserve System is the one that regulates monetary policies and works independently from the government, it has different responsabilities, such as:

Making sure that the money supply does not grow too rapidly or too slowly.

Changing the interest rates.

It can also buy or sell bonds in order to keep stability in the market.