The Fed indirectly controls long- term interest rates by:

Question

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The Fed indirectly controls long-term interest rates by influencing market expectations about future short-term interest rates. When the Fed signals that it will keep short-term interest rates low for an extended period, it reduces market expectations about future long-term interest rates, which in turn, lowers long-term interest rates. This is known as the "yield curve effect." The other choices (A, C, and D) do not accurately describe how the Fed influences long-term interest rates.

The Fed Indirectly Controls Long- Term Interest Rates By