The intent of the Fed's operation twist strategy in 2011 and 2012 was to:
A) increase long-term interest rates.
B) require corporations to issue more commercial paper.
C) require bond rating agencies to impose higher standards on their ratings.
D) reduce long-term interest rates.

Question

Quizplus · Accepted Answer

The intent of the Fed's operation twist strategy was to reduce long-term interest rates. This was achieved by selling short-term Treasury bonds and buying long-term Treasury bonds, which increased demand for long-term bonds and therefore lowered their yields (i.e. interest rates). This was done in order to stimulate borrowing and investment in the economy.

The Intent of the Fed's Operation Twist Strategy in 2011