The Federal Reserve could create a tight money market by:
A. lowering the discount rate
B. raising the discount rate and buying bonds
C. buying bonds
D. raising the discount rate and selling bonds
D. raising the discount rate and selling bonds
Explanation: To create a tight money market, the Federal Reserve would take actions that reduce the amount of funds available to lend. Those actions might include increasing key interest rates (the discount rate and/or the federal funds rate), raising reserve requirements, and selling bonds.
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