The Federal Reserve establishes the federal funds rate and influences the money supply by buying and selling Treasuries (negotiable U.S.Government debt obligations)in the open market.If the Fed buys Treasuries,the money supply will ________ and the federal funds rate will ________.

Question

Quizplus · Accepted Answer

A)If the Fed buys Treasuries, the money supply will increase, and the federal funds rate will decrease. If the Fed sells Treasures, the money supply will decrease, and the federal funds rate will increase.
B)If the Fed buys Treasuries, the money supply will increase, and the federal funds rate will decrease. If the Fed sells Treasures, the money supply will decrease, and the federal funds rate will increase.
C)If the Fed buys Treasuries, the money supply will increase, and the federal funds rate will decrease. If the Fed sells Treasures, the money supply will decrease, and the federal funds rate will increase.
D)If the Fed buys Treasuries, the money supply will increase, and the federal funds rate will decrease. If the Fed sells Treasures, the money supply will decrease, and the federal funds rate will increase.
E)If the Fed buys Treasuries, the money supply will increase, and the federal funds rate will decrease. If the Fed sells Treasures, the money supply will decrease, and the federal funds rate will increase.

The Federal Reserve Establishes the Federal Funds Rate and Influences