When the Federal Reserve buys bonds, it effectively lowers the nominal interest rate in the market.

Name: When the Federal Reserve buys bonds, it effectively lowers the nominal interest rate in the market.
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Question

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When the Federal Reserve buys bonds, it increases the demand for bonds and drives up their price, which in turn lowers the yield on those bonds. Since interest rates move inversely to bond yields, the nominal interest rate in the market effectively decreases.

When the Federal Reserve Buys Bonds, It Effectively Lowers the Nominal