The Fed Can Increase the Money Supply by Conducting Open-Market

question 3

Multiple Choice

The Fed can increase the money supply by conducting open-market

• A)sales or by raising the discount rate.
• B)sales or by lowering the discount rate.
• C)purchases or by raising the discount rate.
• D)purchases or by lowering the discount rate.

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Definitions:

Broaden-and-build Theory

A psychological theory suggesting that positive emotions broaden one’s awareness and encourage novel, varied, and exploratory thoughts and actions, which over time build an individual’s personal resources.

Risk-as-feelings Hypothesis

The theory suggesting that people’s emotional responses to risky situations play a significant role in their decision-making processes, often overriding rational analysis.

Anxiety

A feeling of worry, nervousness, or unease, typically about an imminent event or something with an uncertain outcome.

Yerkes-Dodson Law

The Yerkes-Dodson Law is a psychological principle stating that there is an optimal level of arousal for optimal performance; too little or too much arousal can lead to decreased performance.