If the Fed Lowers the Discount Rate at the Same

question 124

Multiple Choice

If the Fed lowers the discount rate at the same time it conducts an open market sale,it follows that

• A) the money supply will fall.
• B) the money supply will rise.
• C) the money supply will remain unchanged.
• D) cash leakages will rise.
• E) There is not enough information to answer this question.

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Definitions:

Scarcity

Is the fundamental economic problem of having seemingly unlimited human wants and needs in a world of limited resources.

Societies

Large groups of individuals who live together in an organized community with shared laws, traditions, and values.

Goods and Services

The output of an economy or a firm that consists of tangible commodities (goods) and intangible activities (services) offered to satisfy consumer needs.

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An idea or notion based on personal opinions, interpretations, points of view, emotions, and judgment.