If the Federal Open Market Committee wishes to decrease interest rates,
A) it would buy U.S. government bonds.
B) it would buy stocks.
C) it would sell U.S. government bonds.
D) it would buy municipal bonds.

Question

Quizplus · Accepted Answer

When the Federal Open Market Committee (FOMC) wants to decrease interest rates, it buys U.S. government bonds. This action increases the money supply by injecting more money into the banking system, which in turn lowers interest rates.

If the Federal Open Market Committee Wishes to Decrease Interest