An Example of a Tool Used by the Fed That

question 41

Multiple Choice

An example of a tool used by the Fed that decreases the money supply is:

• A) a decrease in the prime lending rate.
• B) an increase in the required reserve ratio.
• C) the Fed buying government bonds in the open market.
• D) a decrease in the discount rate.

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Definitions:

Natural Variation

Refers to the inherent fluctuations in processes and measurements that occur even under stable conditions.

Process Capability Analysis

A statistical technique to determine how well a process can produce output within preset specification limits.

Common Causes

Factors or conditions that are frequently responsible for variations in a process or system, as opposed to special or unique causes.

Special Causes

refer to uncommon, non-random sources of variation in a process, distinguishing them from normal or common causes of variation.