Bank Lending and Deposits Tend to Change as Interest Rates

question 140

Multiple Choice

Bank lending and deposits tend to change as interest rates change.Can the Fed counteract this tendency?

• A)Yes, through its ability to affect the money supply.
• B)Yes, through its ability to change tax levels.
• C)No, the Fed is forbidden by the Constitution from intervening in the economy.
• D)No, the Fed almost always follows a passive monetary policy.

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Definitions:

Hippocampus

A region of the brain associated with memory and learning.

Permanent Storage

The long-term preservation of information or data in a manner that ensures its future retrieval and use.

Cortex

The outer layer of the cerebrum in the brain, involved in complex brain functions such as thought, memory, and consciousness.

Metabolic Rate

This rate measures the amount of energy expended by the body over a certain period of time, including during various activities beyond resting conditions.