In September 2012 the Fed announced that it would buy $40 billion of mortgage backed securities per month. One goal of this policy was to ________ the price of these securities and thereby help ________.
A) raise; prices of housing to fall to their new equilibrium
B) raise; lower long-term interest rates
C) lower; make the short-term interest rate more responsive to Fed actions
D) raise; raise long-term interest rates

Question

Quizplus · Accepted Answer

The goal of the Federal Reserve's policy of buying $40 billion of mortgage-backed securities per month was to raise the price of these securities, which in turn would help lower long-term interest rates. This action was part of a broader strategy known as quantitative easing, aimed at stimulating economic activity by making borrowing cheaper for businesses and consumers.

In September 2012 the Fed Announced That It Would Buy