If the Federal Reserve decided to raise interest rates, it could
A)buy bonds to lower the money supply.
B)buy bonds to raise the money supply.
C)sell bonds to lower the money supply.
D)sell bonds to raise the money supply.

Question

Quizplus · Accepted Answer

When the Federal Reserve decides to raise interest rates, it can sell bonds to lower the money supply. This action increases the interest rates because there is less money available for banks to lend.

If the Federal Reserve Decided to Raise Interest Rates, It