If the Federal Reserve wants to lower interest rates, it can _____ the money supply by _____ Treasury bills.
A) decrease; selling
B) decrease; buying
C) increase; selling
D) increase; buying

Question

Quizplus · Accepted Answer

If the Federal Reserve wants to lower interest rates, it can increase the money supply by buying Treasury bills. When the Fed buys Treasury bills, it injects money into the economy. This increased money supply can lead to a decrease in interest rates as banks have more money to lend and borrowers have more money to spend, which can stimulate economic growth.

If the Federal Reserve Wants to Lower Interest Rates, It