The Fed raises the federal funds rate when it
A)fears inflation.
B)wants to increase the quantity of money.
C)fears recession.
D)wants to encourage bank lending.
E)cannot change the quantity of money.

Question

Quizplus · Accepted Answer

The Federal Reserve typically raises the federal funds rate when it fears inflation to discourage borrowing and spending, which can contribute to rising prices.

The Fed Raises the Federal Funds Rate When It