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Describe whether the following open-market operations represents seignorage or not.

(a) The Fed buys government bonds from banks and burns them (i.e., the Fed does not demand payment for the bonds at maturity).

(b) The Fed sells the corporate bonds (and other assets, possibly toxic ones) that it has on its balance sheet since the financial crisis.

Macroeconomics, Economics

  • Category:- Macroeconomics
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