The Tools at the Disposal of the Fed for Changing

question 528

Multiple Choice

The tools at the disposal of the Fed for changing the quantity of money do NOT include

• A) open market operations.
• B) changing the required reserve ratio.
• C) changing discount rates.
• D) increasing the number of commercial banks.

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Definitions:

Standard Deviation

A statistical measure representing the dispersion or variability around the mean (average) of a set of data points.

Annual Returns

The percentage change in an investment's value over a one-year period, including both capital gains and dividends, used to assess its performance.

Real Rate

The interest rate adjusted for inflation, representing the true cost of borrowing.

Inflation

The increase rate in the general price tag for goods and services, eroding financial capacity.