The purpose of the commitment by the Fed to keep the federal funds rate at zero for a long period of time is to
A)lower the long term interest rates.
B)lower the short term interest rates.
C)increase the long term interest rates.
D)increase the short term interest rates.

Question

Quizplus · Accepted Answer

The commitment by the Fed to keep the federal funds rate at zero for a long period is primarily aimed at lowering long-term interest rates. This is because expectations of low short-term rates for an extended period can lead to lower yields on longer-term securities, as investors anticipate lower returns across all maturities.

The Purpose of the Commitment by the Fed to Keep