The Fed is concerned that inflation might occur.To help eliminate this possibility, the Fed could ________ government securities to ________ the federal funds rate in the short run.
A) buy; lower
B) buy; raise
C) sell; lower
D) sell; raise
E) sell; not change

Question

Quizplus · Accepted Answer

The Fed could sell government securities to decrease the money supply, which would raise the federal funds rate in the short run, helping to curb inflation.

The Fed Is Concerned That Inflation Might Occur