If the Fed Is Trying to Peg the Interest Rate

question 9

Multiple Choice

If the Fed is trying to peg the interest rate, it

• A)needs to sell government securities whenever interest rates go up
• B)needs to tie the discount rate to the three-month Treasury-bill rate
• C)loses control over money supply
• D)needs to restrict money supply whenever interest rates increase
• E)none of the above

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Definitions:

Conditioned on Performance

Conditioned on performance describes a contractual clause stating certain obligations that must be met or actions that must be performed for the contract to remain valid.

Warehouse

is a large building where goods are stored before they are distributed, sold, or used.

Fully Executed

A contract or agreement that has been completely signed by all parties involved and all the terms are fully met.

Rescinded by Agreement

The mutual decision of parties involved in a contract to cancel or nullify the agreement.