The Quantity of Reserves Demanded Decreases as the Federal Funds

question 12

Multiple Choice

The quantity of reserves demanded decreases as the federal funds rate rises because

• A)people want more liquid assets as the federal funds rate rises.
• B)the price of bonds rise as the federal funds rate rises.
• C)the opportunity cost of holding excess reserves increases as the federal funds rate rises.
• D)people want more money to invest as the federal funds rate rises.

---

Definitions:

Net Operating Income

An indicator of a firm's profitability from standard operations, excluding non-operational income and expenses like taxes and interest.

Operations

The activities involved in running a business, production, or system effectively and efficiently.

Contribution Margin

It refers to the amount of revenue remaining after deducting variable costs, which can contribute to covering fixed costs and generating profit.

Operations

The day-to-day activities involved in running a business, focusing on creating and delivering products or services.