If the Federal Reserve Wants to Lower the Interest Rate

Suppose that the Federal Reserve has set a target for the federal funds rate. If initially the equilibrium interest rate happens to be higher than the target interest rate, then the Federal Reserve should _____ Treasury bills in the open market, _____ the money supply, shift the supply of money curve to the _____, and _____ the interest rate to the target rate. A) sell; decrease; left; raise B) purchase; decrease; left; lower C) purchase; increase; right; lower D) sell; increase; left; raise

The federal funds rate is: A) determined by the supply of and demand for money. B) set by Congress. C) determined in the real market by the aggregate supply and aggregate demand curves. D) the interest rate that banks pay when they borrow directly from the Fed.