If the Fed Desired to Reduce the Federal Funds Rate

question 33

Multiple Choice

If the Fed desired to reduce the federal funds rate,

• A)it would conduct an open market sale, reducing reserve supply.
• B)it would conduct an open market purchase, increasing reserve supply.
• C)it would conduct an open market sale, increasing reserve demand.
• D)it would conduct an open market purchase, reducing reserve demand.

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Definitions:

Net Exports

The value of a country's total exports minus the value of its total imports, measuring the net income from foreign investments.

GDP

Gross Domestic Product, a measure of the economic performance of a nation, representing the total value of all goods and services produced over a specific time period.

Imports

are goods and services brought into one country from another for the purpose of trade or sale, contributing to a country's supply of products not locally produced.

Exports

Goods, services, or commodities sent from one country to another country for sale or trade.