If the Fed Raises Its Target for the Federal Fund

question 134

Multiple Choice

If the Fed raises its target for the federal fund rate, this indicates

• A) the Fed is pursuing an expansionary monetary policy.
• B) the Fed is pursuing a contractionary monetary policy.
• C) the Fed is attempting to lower unemployment.
• D) the Fed is concerned that the growth in aggregate demand will exceed potential GDP.

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Definitions:

Journal Entry

A record in accounting that represents a transaction and shows the accounts affected and the amounts.

Sale

A transaction between two parties where the buyer receives goods, services, or assets in exchange for money or other forms of compensation.

Issuing Bonds

The process of a borrower offering bonds to investors as a form of debt securities to raise capital.