Use the Following to Answer Questions

question 124

Multiple Choice

Use the following to answer questions .
Exhibit: The Bond Market
-(Exhibit: The Bond Market) If the Fed wants to achieve the results shown in Panel (b) , it should

• A) lower the discount rate.
• B) decrease margin requirements.
• C) decrease reserve requirements.
• D) sell government bonds in the open market.

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Definitions:

Discharged Debts

Debts that have been forgiven or eliminated, usually through bankruptcy proceedings, and are no longer legally enforceable.

Repay

To return money that was borrowed, often including interest in the case of loans or credit.

Purchase Money Security Interest

A purchase money security interest is a particular type of security interest that enables creditors to have a claim over assets that were acquired with the funds provided by the creditor.

Negative Equity

Occurs when the value of an asset falls below the outstanding balance on the loan used to purchase that asset.