Suppose that the Federal reserve is concerned about the effects of rising stock prices on the economy.What could it do?
A) buy bond to raise the interest rate.
B) buy bonds to lower the interest rate.
C) sell bonds to raise the interest rate
D) sell bonds to raise the interest rate .

Question

Quizplus · Accepted Answer

Selling bonds to raise the interest rate would make investment in stocks less attractive, which could slow down the increase in stock prices. Buying bonds to lower the interest rate would have the opposite effect and could further fuel the rise in stock prices. Therefore, option C is the best choice.

Suppose That the Federal Reserve Is Concerned About the Effects