In Figure 15.3,the Fed can change the equilibrium interest rate from 2 percent to 6 percent by doing all of the following except

Question

Quizplus · Accepted Answer

If the Fed decreases the federal funds rate, it would make it easier for banks to borrow money and lead to a decrease in the equilibrium interest rate, not an increase as stated in the question. Selling bonds, raising the discount rate, and raising the reserve requirement would all reduce the money supply and increase interest rates.