Everything Else Held Constant,in the Market for Reserves,when the Federal

question 12

Multiple Choice

Everything else held constant,in the market for reserves,when the federal funds rate is 3%,increasing the interest rate paid on excess reserves from 1% to 2%

• A)lowers the federal funds rate.
• B)raises the federal funds rate.
• C)has no effect on the federal funds rate.
• D)has an indeterminate effect on the federal funds rate.

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Definitions:

Total Revenue

The total amount of money generated by the sale of goods or services related to the company's primary operations.

Elastic

Describes a situation where the demand or supply for a good or service significantly changes in response to a change in price.

Unit Elastic

A demand or supply situation where a percentage change in price leads to an equal percentage change in quantity demanded or supplied.

Elasticity of Demand for Cookies

A measure of how much the quantity demanded of cookies changes in response to a change in price.