In an Effort to Address the Troubled Economy

question 8

Multiple Choice

In an effort to address the troubled economy, ...ʺFor the ninth time in just over a year, the Federal Reserve is expected to cut interest rates, quite possibly its last reduction in this downturn.ʺ Rates have not been this low ʺ... since 2003, when the economy was growing at a snailʹs pace.
The ʺinterest ratesʺ the Fed is cutting is the__________ .

• A) Federal Funds rate
• B) real long-term interest rate
• C) reserve interest rate
• D) nominal long-term interest rate

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Definitions:

Transaction Needs

Describes the demand for money for the purpose of conducting daily transactions, such as purchasing goods and services.

Disbursement Float

The time lag between when a check is written and when it is actually deducted from the payer's account.