Which of the statements is accurate regarding the benefits of the federal Reserve issuing repurchase agreements (repos)and reverse repurchase agreements (reverse repos).
Both statements are accurate:
1) Repurchase agreements (repos) allow the Federal Reserve to inject liquidity into the financial system by temporarily purchasing securities and providing short-term funding to banks and financial institutions.
2) Reverse repurchase agreements (reverse repos) allow the Federal Reserve to withdraw liquidity from the financial system by temporarily selling securities and absorbing excess reserves from banks and financial institutions.