If the Federal Reserve buys a Treasury bond from a bank, what will be the effect on the interest rate the bank charges its customers for a loan? A. The interest rate will decrease since there are more available funds for the bank to loan. B. The interest rate will increase since there are more available funds for the bank to loan. C. The interest rate will increase since there are fewer available funds for the bank to loan. D. The interest rate will decrease since there are fewer available funds for the bank to loan.

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Zoe Bowen

Computers & Technology

9 July, 16:44

If the Federal Reserve buys a Treasury bond from a bank, what will be the effect on the interest rate the bank charges its customers for a loan? A. The interest rate will decrease since there are more available funds for the bank to loan. B. The interest rate will increase since there are more available funds for the bank to loan. C. The interest rate will increase since there are fewer available funds for the bank to loan. D. The interest rate will decrease since there are fewer available funds for the bank to loan.

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Monty · Answer 1

A.

The interest rate will decrease since there are more available funds for the bank to loan.

It is one of the strategies of expansionist tax policy that government uses to put more money into the economy and stimulate economic growth.