The Fed can change the equilibrium rate of interest by changing
A)Government spending.
B)Taxes.
C)Reserve requirements or the discount rate,or through open market operations.
D)Tariffs.

Question

Quizplus · Accepted Answer

The Fed can change the equilibrium rate of interest by changing reserve requirements or the discount rate, or through open market operations. By adjusting these tools of monetary policy, the Fed can influence the supply and demand for money in the economy, which in turn affects the equilibrium interest rate. Government spending, taxes, and tariffs are all tools of fiscal policy, which can also impact the economy, but do not directly affect the equilibrium interest rate.

The Fed Can Change the Equilibrium Rate of Interest by Changing