When the Fed wants to increase interest rates,it:
A) instructs banks across the nation that they must raise their rates.
B) sells bonds in the open market.
C) buys bonds in the open market.
D) adjusts the fractional reserve ratio.

Question

Quizplus · Accepted Answer

When the Fed wants to increase interest rates, it sells bonds in the open market. This decreases the money supply in circulation and increases the demand for borrowing, which leads to higher interest rates.

When the Fed Wants to Increase Interest Rates,it