If the federal funds rate were above the level the Federal Reserve had targeted,the Fed could move the rate back towards its target by
A)buying bonds.This buying would reduce reserves.
B)buying bonds.This buying would increase reserves.
C)selling bonds.This selling would reduce reserves.
D)selling bonds.This selling would increase reserves.

Question

Quizplus · Accepted Answer

When the Federal Reserve buys bonds, it increases the reserves in the banking system, which can lower the federal funds rate towards the target by increasing the supply of money available for lending.

If the Federal Funds Rate Were Above the Level the Federal