If the Fed has announced that it plans on increasing the interest rate it will

Question

Quizplus · Accepted Answer

When the Fed plans to increase the interest rate, it aims to reduce inflation and stabilize the economy. Therefore, it would engage in contractionary open market operations, which involve selling government securities to banks and the public, thereby reducing the money supply and increasing interest rates. This makes it more expensive for people to borrow money and discourages spending, ultimately reducing inflation.

If the Fed Has Announced That It Plans on Increasing