The Fed can decrease the federal funds rate by

Question

Quizplus · Accepted Answer

Buying government bonds increases the money supply in the economy, which then lowers market interest rates and ultimately the federal funds rate. Selling government bonds has the opposite effect, which would increase market interest rates and the federal funds rate. While the Fed does have direct control of the federal funds rate, announcing a lower rate without taking any action to increase the money supply would not necessarily lower market interest rates or have the intended effect on the economy.

The Fed Can Decrease the Federal Funds Rate by