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:

Semantic Priming

A psychological effect in which the understanding or processing of a word is influenced by a prior exposure to a semantically related word or concept.

Episodic Memory

Memory for specific events and experiences.

Automatization

The process by which a skill becomes automatic with practice, requiring less conscious thought and effort to perform.

Spreading Activation

A mechanism within associative networks that explains how information is retrieved in the brain, where thinking about one concept activates related concepts.