In a repo transaction, the Fed _______ money; in a reverse repo transaction, the Fed _______ money.
A) borrows; loans
B) loans; borrows
C) prints new; destroys
D) destroys; prints new

Question

Quizplus · Accepted Answer

In a repo transaction, the Fed loans money to banks or other financial institutions by purchasing securities from them with an agreement to sell the securities back at a later date. In a reverse repo transaction, the Fed borrows money from banks or other financial institutions by selling securities to them with an agreement to buy the securities back at a later date.

In a Repo Transaction, the Fed _______ Money; in a Reverse