Recall the Application About the Reasons Why Interest Rates Rise

Recall the Application about the reasons why interest rates rise during an economic recovery to answer
the following question(s) . Although higher interest rates are often associated with lower output, interest
rates often start to rise when an economy recovers from a recession and when an economy grows quickly.
As an example, in 2005, a year in which real GDP grew very rapidly,interest rates on 3 -month Treasury
bills rose from 2.3 percent at the beginning of the year to 3.9 percent by the end of the year.
-Recall the Application. One way the Fed could increase interest rates during an economic recovery is to

A) increase the liquidity demand for money.
B) conduct an open market sale.
C) decrease reserve requirements.
D) decrease the discount rate.