-Monetizing the federal debt:
A) reduces upward pressure on interest rates.
B) leads to a larger amount of loans made than if the debt were not monetized.
C) refers to an increase in the money supply by the Federal Reserve to accommodate federal government borrowing.
D) all of the above.

Question

-Monetizing the federal debt:
A) reduces upward pressure on interest rates. 
B) leads to a larger amount of loans made than if the debt were not monetized. 
C) refers to an increase in the money supply by the Federal Reserve to accommodate federal government borrowing. 
D) all of the above.

Quizplus · Accepted Answer

Monetizing the federal debt involves the Federal Reserve buying government bonds, which increases the money supply to accommodate federal government borrowing. This process can reduce upward pressure on interest rates because the government doesn't need to attract buyers for its debt with higher interest rates. Additionally, by increasing the money supply, it can lead to a larger amount of loans made, as banks have more money to lend.

-Monetizing the Federal Debt