If the Fed pursues a policy goal of
A)preventing high interest rates,and deficits cause interest rates to rise,then deficits will lead to money creation.
B)preventing high inflation,and deficits cause inflation to rise,then deficits will lead to money creation.
C)preventing high bond prices,and deficits cause bond prices to rise,then deficits will lead to money creation.
D)preventing high stock prices,and deficits cause stock prices to rise,then deficits will lead to money creation.

Question

Quizplus · Accepted Answer

If the Fed aims to prevent high interest rates and deficits cause interest rates to rise, the Fed may create money to buy government securities, thereby increasing the money supply and lowering interest rates.

If the Fed Pursues a Policy Goal of