Which of the Following Changes Is Observed When the Fed

question 122

Multiple Choice

Which of the following changes is observed when the Fed increases the federal funds rate?

• A)Inflation is brought to an immediate halt.
• B)The inflation rate increases for several months,but then begins to decrease.
• C)Major banks try to offset this change by lowering the interest rates they charge on loans.
• D)Major banks try to offset this change by lowering the interest rates they pay on savings deposits.
• E)Major banks raise the prime interest rate that they charge to their best customers.

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Definitions:

Dissociating Member

An individual who is leaving or has left a partnership or limited liability company (LLC), and hence is severing ties with the entity.

LLC

A Limited Liability Company is a type of business organization that merges the benefit of pass-through taxation seen in partnerships or sole proprietorships with the advantage of limited liability found in corporations.

Capital Injection

A capital injection is the infusion of funds into a business by its owners or external parties, often to shore up its financial health or expand operations.

Bankruptcy

A legal process for individuals or businesses that are unable to repay their outstanding debts, allowing them to eliminate or repay some or all of their debts under the protection of the bankruptcy court.