The onset of the Korean War in 1950 made it more difficult for the Fed to peg the interest rate on Treasury securities because

Question

Quizplus · Accepted Answer

The federal government's increased borrowing during the Korean War would have increased the supply of Treasury securities in the market, making it more difficult for the Fed to peg the interest rate on these securities. This is because increased supply, all else equal, would put downward pressure on prices (i.e. interest rates) as buyers would have more bargaining power.

The Onset of the Korean War in 1950 Made It