Which of the following is the most likely effect when the Fed increases the supply of funds to the banking system?
A)higher interest rates offered on bank deposits
B)lower yields on debt securities
C)higher interest rates on home mortgages
D)higher interest rates on loans to businesses

Question

Quizplus · Accepted Answer

When the Federal Reserve increases the supply of funds to the banking system, it typically leads to lower interest rates overall. This is because banks have more money to lend, which increases the supply of loanable funds. As a result, the cost of borrowing, including the yields on debt securities, tends to decrease.

Which of the Following Is the Most Likely Effect When