If the Federal Reserve Wants to Increase the Equilibrium Interest

question 25

Multiple Choice

If the Federal Reserve wants to increase the equilibrium interest rate, it will _____ the _____ money.

• A) increase, demand for
• B) increase, supply of
• C) decrease, demand for
• D) decrease, supply of

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Definitions:

Treasury Stock

Shares repurchased by the issuing company, reducing the amount of outstanding stock on the open market.

Shares Outstanding

The total number of shares of stock that are owned by investors, including both public shareholders and company insiders.

Market Price

The existing rate at which a service or asset is traded within a marketplace.

Buy Back

A corporate action in which a company purchases its own shares from the marketplace, reducing the number of outstanding shares.