On a Graph of the Supply and Demand for Reserves

question 40

Multiple Choice

On a graph of the supply and demand for reserves, if there is discount lending, what would the Fed have to do to raise the equilibrium federal funds rate?

• A) buy bonds
• B) sell bonds
• C) raise the reserve requirement
• D) none of the above

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Definitions:

Voting Shares

Voting shares represent ownership in a company with the rights to vote on corporate policy and decisions.

Open Market

An open market is a scenario without trade barriers, where buyers and sellers are allowed to trade goods or securities freely without restrictive regulations.

Second Purchase

The act of buying a product or service for the second time after the initial purchase.

Goodwill

An intangible asset that arises when a buyer acquires an existing business, representing the value of the business's reputation, brand, and other non-physical assets.