A sign that the Federal Reserve is moving to raise interest rates would be
A) an increase in bank reserves.
B) large purchases of Treasury securities by the Federal Reserve.
C) a widening gap between the Treasury bill yield and the discount rate.
D) a narrowing gap between the Treasury bill yield and the discount rate.

Question

Quizplus · Accepted Answer

A widening gap between the Treasury bill yield and the discount rate can indicate that the Federal Reserve is moving to raise interest rates. This is because as the Fed raises rates, the cost of borrowing increases, which can lead to higher yields on Treasury bills as investors demand more return in a higher interest rate environment.

A Sign That the Federal Reserve Is Moving to Raise