If the Fed wants to lower the federal funds rate, it can

Question

Quizplus · Accepted Answer

The Federal Reserve can decrease the federal funds rate by buying government securities on the open market. This increases the money supply in the banking system, causing interest rates to decrease, ultimately leading to a lower federal funds rate. Selling government securities or decreasing the budget deficit would have the opposite effect and increase interest rates. Instructing banks to print more money is not a viable option for the Fed as it would lead to inflation.

If the Fed Wants to Lower the Federal Funds Rate