Figure 14.4
-Refer to Figure 14.4. If the Fed wants to reduce the economy's market interest rate from 6 percent to 4 percent, it needs to _______.

Question

Quizplus · Accepted Answer

To reduce the market interest rate from 6 percent to 4 percent, the Fed needs to increase the money supply by buying government bonds in the open market, which will increase the demand for bonds and decrease their yield (interest rate).

Figure 14.4 -Refer to Figure 14.4. If the Fed Wants to Reduce