Imagine That the Federal Funds Rate Was Below the Level

question 222

Multiple Choice

Imagine that the federal funds rate was below the level the Federal Reserve had targeted.To move the rate back towards it's target the Federal Reserve could

• A) buy bonds.This buying would increase the money supply.
• B) buy bonds.This buying would reduce the money supply.
• C) sell bonds.This selling would increase the money supply.
• D) sell bonds.This selling would reduce the money supply.