The Correlation Coefficient _____

question 12

Multiple Choice

The correlation coefficient _____.

• A) is the same as the covariance
• B) can be larger than 1
• C) cannot be larger than 1
• D) cannot be negative

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Definitions:

Open Market Operations

The buying and selling of government securities in the open market by a central bank to control the supply of money.

Money Supply

The overall amount of available money in an economy, which encompasses cash, coins, and the balances in checking and savings accounts, at a certain moment in time.

Discount Rate

The interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve's discount window.

Reserve Requirements

Mandatory regulations set by central banks determining the minimum amount of reserves that must be held by commercial banks, ensuring they have enough cash on hand to meet withdrawal demands.