The Fed has tried to influence _____
A) long-term interest rates by purchasing mortgage-backed securities.
B) short-term interest rates by purchasing mortgage-backed securities.
C) long-term interest rates by purchasing treasury bills.
D) short-term interest rates by purchasing long-term bonds.
E) monetary aggregates by printing banknotes.

Question

Quizplus · Accepted Answer

The Fed has tried to influence long-term interest rates by purchasing mortgage-backed securities. Purchasing mortgage-backed securities is one of the tools that the Fed uses to implement its monetary policy. By purchasing mortgage-backed securities, the Fed can increase the demand for these securities and lower their yields, which in turn can lower long-term interest rates.

The Fed Has Tried to Influence _____