Under the Fed's current interest-rate-targeting approach to monetary policy, if the demand for federal funds by depository institutions increases today, then, other things being equal

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When the demand for federal funds increases, the market federal funds rate tends to rise. To counteract this and maintain its target rate, the Fed's Trading Desk would typically respond by buying bonds, which injects liquidity into the banking system and helps to lower the federal funds rate back towards its target.

Under the Fed's Current Interest-Rate-Targeting Approach to Monetary Policy, If