If the Fed wants to raise the federal funds interest rate,it will ________ securities to ________ the banking system.

Question

Quizplus · Accepted Answer

When the Fed wants to raise the federal funds interest rate, it will sell securities to remove reserves from the banking system. This decreases the supply of money available in the system, which increases the cost of borrowing money (the interest rate) as banks compete for a smaller pool of available funds.

If the Fed Wants to Raise the Federal Funds Interest