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When the Federal Reserve Increases the Interest Rate It Charges

question 7

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When the Federal Reserve increases the interest rate it charges banks to borrow reserves,it is controlling the money supply by using which of the following tools?


Definitions:

Cheques

A written, dated, and signed instrument that directs a bank to pay a specific sum of money to the bearer or a named party.

Deposit

Money placed into a financial institution for safekeeping or into an account to fulfill a financial requirement.

Balance

The amount of money held in a financial account at any moment, reflecting all transactions.

Account

A record summarizing all the transactions pertaining to a single item in the accounting equation.

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