If the Fed Is Concerned About Inflation, Its Actions_{--------------------} Long-Term

question 27

Multiple Choice

If the Fed is concerned about inflation, its actions_{--------------------} long-term interest rates so that investment_{--------------------} and net exports _{--------------------}.

• A)lower; decreases; decrease
• B)raise; decreases; decrease
• C)lower; increases; decrease
• D)raise; increases; increase
• E)lower; increases; increase

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Definitions:

Reserve Requirement

The Reserve Requirement is a central bank regulation that sets the minimum amount of reserves each bank must hold to customer deposits and notes.

Financial Institutions

Organizations that provide financial services, such as banks, insurance companies, pension funds, investment companies, and credit unions, facilitating the flow of money in the economy.

Failed Banks

Financial institutions that have been unable to meet their obligations, leading to closure or takeover by a regulatory agency.

Fiat Money

Currency that a government has declared to be legal tender, despite it having no intrinsic value or being backed by a physical commodity.