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Suppose that the Federal Reserve is concerned that the US economy is producing above the
natural rate of output. What could it do to return the economy back to the Natural Rate of
Output?
Sell bonds to lower the interest rate
Sell bonds to raise the interest rate
Buy bonds to raise the interest rate
Buy bonds to lower the interest rate

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  • 1. Suppose that the Federal Reserve is concerned that the US economy is producing above the natural rate of output. What could it do to return the economy back to the Natural Rate of Output? Sell bonds to lower the interest rate Sell bonds to raise the interest rate Buy bonds to raise the interest rate Buy bonds to lower the interest rate