The U.S.Fed "Sets" Interest Rates by

question 19

Multiple Choice

The U.S.Fed "sets" interest rates by

• A)announcing a desired discount rate and then attempting to keep the federal funds rate two percentage points above it
• B)announcing a desired monetary growth rate designed to keep inflation stable
• C)buying or selling Treasury bills
• D)announcing its intentions far in advance since transparency allows financial markets to adjust before any action is taken
• E)trying to keep bank reserves stable

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Definitions:

Cutting Your Losses

A decision-making process where one decides to exit a situation to prevent further loss or harm.

Stress-Producing Problem

An issue or situation that causes a significant amount of mental or emotional strain, often leading to adverse effects on one’s health and well-being.

Problem-Focused Coping

A coping strategy that involves directly addressing a problem causing stress in order to reduce or remove the source of the stress.

Catastrophic Thinking

The inclination to assume the worst case scenario or believe that negative events are much worse than they are in reality.