When the Fed buys government bonds on the open market,

Question

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When the Fed buys government bonds on the open market, the increased demand for government bonds leads to a decrease in their market rate of interest. This decrease in government bond yields, in turn, lowers the market rate of interest on other fixed-income securities, such as corporate bonds. Therefore, both the market rate of interest on government bonds and corporate bonds are lowered.

When the Fed Buys Government Bonds on the Open Market