The Fed can change the equilibrium rate of interest by changing
A)Government spending.
B)Taxes.
C)Reserve requirements or the discount rate,or through open market operations.

Question

Quizplus · Accepted Answer

The Fed can change the equilibrium rate of interest by changing reserve requirements or the discount rate, or through open market operations. By increasing or decreasing reserve requirements, the Fed can influence the amount of money banks have to lend, thus affecting the overall interest rate. Changing the discount rate, which is the rate at which banks can borrow money from the Fed, can also impact the interest rate as it affects banks' lending behavior. Finally, the Fed can use open market operations to buy or sell government securities, thus affecting the overall money supply and interest rate.

The Fed Can Change the Equilibrium Rate of Interest by Changing