If the Demand for Money Increases and the Fed Wants

question 197

Multiple Choice

If the demand for money increases and the Fed wants interest rates to remain unchanged, which of the following would be appropriate policy?

• A) recall Federal Reserve Notes from circulation
• B) raise the legal reserve requirement
• C) buy bonds in the open market
• D) raise the discount rate

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Definitions:

Fibers

Threadlike structures forming animal or vegetable tissue; in technology, often refers to materials used in making textiles or composites.

Auditory Cortex

The region of the brain that processes auditory information, allowing for the perception of sounds.

Temporal Lobes

Lobes at the sides of the brain’s cerebral cortex; they contain areas involved in hearing, memory, perception, emotion, and (in the left lobe, typically) language comprehension.

Somatosensory Cortex

A region of the brain responsible for processing sensory information from various parts of the body, including touch, temperature, and pain.