When the Fed fears inflation, the Fed ________ government securities, so that the federal funds rate ________ and the quantity of money ________.
A) sells; falls; decreases
B) sells; rises; decreases
C) sells; falls; increases
D) buys; falls; increases
E) buys; rises; decreases

Question

Quizplus · Accepted Answer

When the Fed fears inflation, it sells government securities to decrease the money supply, which causes the federal funds rate to rise and the quantity of money to decrease.

When the Fed Fears Inflation, the Fed ________ Government Securities