Question

What happens when the fed aims to change interest​ rates?

a. it announces a new discount interest rate.
b. it asks congress to legislate new interest rates.
c. it buys or sells dollars on the foreign exchange market to achieve the desired rate.
d. it buys or sells government bonds on the open market to achieve the desired rate?

Answer 1

What happens when the fed aims to change interest​ rates? It buys or sells government bonds on the open market to achieve the desired rate. The fed can change interest rates based on sales or purchase of government bonds. Interest rates are defined as the amount of money you can accrue while you have your money in an interest barring account. They can also represent money that is applied to the principle of a loan or credit card when financing an item.