A decision on the part of the FOMC to raise interest rates must necessarily be followed by
A) Fed open market purchases, which lower the money supply and reduce interest rates.
B) Fed open market purchases, which increase the money supply and reduce interest rates.
C) Fed open market sales, which lower the money supply and increase interest rates.
D) Fed open market sales, which increase the money supply and reduce interest rates.

Question

Quizplus · Accepted Answer

When the FOMC decides to raise interest rates, it typically does so by selling securities in open market operations, which decreases the money supply and, as a result, increases interest rates.

A Decision on the Part of the FOMC to Raise