When the Fed Takes Action to Change Nominal Interest Rates

question 127

Multiple Choice

When the Fed takes action to change nominal interest rates, it does so by

• A)buying and selling bonds.
• B)mandating that banks change the prime rate.
• C)recommending that the president change the interest rate.
• D)recommending that Congress change the interest rate.
• E)increasing the required reserve ratio.

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Definitions:

Payoff

A final payment that settles a debt or an investment, or the bribe to secure someone's compliance or silence.

ADR

Alternative Dispute Resolution; methods for resolving disputes outside of court, including arbitration and mediation.

Mediation

A form of alternative dispute resolution where a neutral third party helps disputants reach a mutually acceptable agreement.

Negotiation

The process of discussing and reaching a mutual agreement between parties with differing needs or perspectives.