Discuss the Differences Between Permanent and Temporary Open Market Operations

question 36

Essay

Discuss the differences between permanent and temporary open market operations and the instruments the FOMC uses for each.

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Definitions:

Investing Activities

These activities generate cash inflows and outflows related to acquiring or disposing of noncurrent assets such as property, plant, and equipment, long-term investments, and loans to another entity.

Cash Outflow

Cash outflow refers to the movement of money out of a business, mainly through expenses, purchases, or investments, over a period.

Buying Property

The process of acquiring ownership of land or buildings, typically for residential, commercial, or investment purposes.

Operating Activities

These are the day-to-day actions that involve the production, sales, and delivery of a company's products or services, as reported in the cash flow statement.