Question

Based on the information presented in the video, what is the main goal of buying and selling government securities?

to reduce the strength of US currency
to decrease the unemployment rate
to increase the inflation rate
to influence the Federal Funds Rate

Answer 1

D.) to influence the Federal Funds Rate

Hope this helps!!! :)

Answer 2

to influence the Federal Funds Rate

Step-by-step explanation:

Federal funds rate is basically an interest rates that a certain bank charged when they loaned their money to another bank. This amount of interest is heavily influenced by the buying /selling of government securities.

When the government sell more securities, this will reduce the amount of money that the bank can lend to others. This will resulted in increased interest rates since banks need to do something to maintain their revenue. The opposite happen when the government buy more of the securities.