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

2b2t

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Answer:

D.

the federal reserve injects money into banks to give them peace of mind to lower their interest rates. the lower the interest rate, the more people will loan from the bank. this increases the funding to the bank when the loans are paid off so the bank can pay back the reserve while having increased profit

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