When the Fed sells short-term bonds and buys long-term bonds,it is engaging in
A)changing the discount rate.
B)forward guidance.
C)backward guidance.
D)a maturity extension program.

Question

Quizplus · Accepted Answer

Selling short-term bonds and buying long-term bonds is known as a maturity extension program, as it extends the maturity of the Fed's bond portfolio. This is done to lower long-term interest rates and encourage investment, which can stimulate economic growth.

When the Fed Sells Short-Term Bonds and Buys Long-Term Bonds,it