If the Fed Is Targeting Interest Rates, Then During an Economic

question 63

Multiple Choice

If the Fed is targeting interest rates, then during an economic downturn it will take actions that will

• A)raise interest rates, thus spurring economic growth.
• B)raise interest rates, thus slowing economic growth.
• C)lower interest rates, thus spurring economic growth.
• D)lower interest rates, thus slowing economic growth.

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Definitions:

Spot Rate

The current market price at which a currency can be bought or sold for immediate delivery.

Forward Rate

An agreed-upon exchange rate for a currency transaction that will occur at a future date.

Spot Rate

The current market price to immediately exchange one currency for another, often used for immediate currency trades.

Forward Contract

A customizable financial contract between two parties to buy or sell an asset at a specified future date and price.