Question

The federal reserve's open market committee has decided that the federal funds rate should be 2% rather than the current rate of 1.5%. the appropriate open market action is to _____ treasury bills to _____ the money _____ curve.

Answer 1

The Federal Reserve should sell more treasury bills as a way of decreasing the overall money supply curve. By taking money out of the hands of investors and getting them into T-bills, this will increase the scarcity of the money overall and will increase the overall interest rate that federal funds will receive.