Suppose the Fed Announces That It Expects Interest Rates to Fall

question 107

Multiple Choice

Suppose the Fed announces that it expects interest rates to fall in the next quarter. What happens to the demand for money today?

• A) The precautionary demand for money goes up.
• B) The speculative demand for money goes up.
• C) The transaction demand for money goes down.
• D) The speculative demand for money goes down.

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Definitions:

Valves

Structures within the heart and veins that maintain one-way blood flow, preventing backflow and ensuring efficient circulation.

Regulate Body Temperature

The physiological process by which an organism maintains its internal temperature within a certain range, despite external temperature changes.

Glomus

A peripheral chemoreceptor that is primarily involved in regulating respiratory activity in response to changes in blood gases.

Metarteriole

One of the small peripheral blood vessels that contain scattered groups of smooth muscle fibers in their walls; located between the arterioles and the true capillaries.