If the Federal Reserve Uses Open-Market Operations to Lower the Interest

question 100

Multiple Choice

If the Federal Reserve uses open-market operations to lower the interest rate on short-term U.S. government bonds, then, as a consequence, asset prices

• A) increase and the average expected rate of return on assets decreases.
• B) decrease and the average expected rate of return on assets increases.
• C) increase and the average expected rate of return on assets increases.
• D) decrease and the average expected rate of return on assets decreases.

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Definitions:

Advantage

A favorable or beneficial condition, circumstance, or characteristic that puts someone or something in a better position.

Resources

Assets, materials, or inputs used by an individual or organization to achieve objectives or produce goods and services.

Best Interest

A principle that emphasizes acting for the greatest benefit or advantage of all parties involved.

Benefit

An advantage, improvement, or gain that is obtained from an action, decision, or situation.