The Fed can influence long-term interest rates by

Question

Quizplus · Accepted Answer

The Fed can influence long-term interest rates by influencing the current one-year rate (A) and affecting people's expectations of future short-term rates (B). By adjusting the federal funds rate and other short-term interest rates, the Fed can influence the expectations of investors and borrowers about the path of future interest rates, which in turn affects long-term rates. Therefore, both A and B are correct. Choice C is not directly related to influencing long-term interest rates.

The Fed Can Influence Long-Term Interest Rates by