Government Bonds And The Federal Funds Rate
How do government-initiated purchases or sales of government bonds affect the federal funds rate?
A
The government uses the sale of securities to change the money supply, thereby changing the federal funds rate.
B
The government holds securities static, allowing the stock market to drive the money supply and thereby change the federal funds rate.
C
The government holds securities static, allowing the stock market to drive the prime rate and thereby change the federal funds rate.
D
The government uses the sale of securities to change the prime rate, thereby changing the federal funds rate.
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