a. The Federal Reserve buys bonds in an open- market operation. b. The Fed increases the interest rate it pays banks for holding reserves. e. The Fed reduces its lending to banks through its Term Auction Facility. d. Rumors about a computer virus attack on ATM machines increase the amount of money people hold as currency rather than demand deposits. e. The Fed flies a helicopter over 5th Avenue in New York City and drops newly printed $100 bills.

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A: Fed is the central bank of United States which controls the supply of money in the economy.

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A: The correct option is b.

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A: The central bank is the apex institution that manages monetary policy in the economy.

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A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: How can banks compute and quote a forward rate to their customers?

A: FORWARD RATE: An interest rate charged or applied on the financial transactions that are yet to take…