Econ 1120 – INTRO MACRO – Spring-2012 –March 1, 2012
Finally, Fed directly buy or sell bond on the market. Buying (selling) the bond gives (receive) the money from the market such that the counter parties, bond sellers (buyers), deposit (withdraw) the money into the bank. After money inflow (outflow), banks start to make loans out or reduce their position on loan. ................
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