The Fed can attempt to increase the federal funds rate by
A)selling Treasury bills,which increases bank reserves.
B)buying Treasury bills,which increases bank reserves.
C)selling Treasury bills,which decreases bank reserves.
D)buying Treasury bills,which decreases bank reserves.

Question

Quizplus · Accepted Answer

The Federal Reserve can increase the federal funds rate by selling Treasury bills, which decreases bank reserves. This action reduces the amount of money banks have available to lend, leading to higher interest rates.

The Fed Can Attempt to Increase the Federal Funds Rate