If the Fed Wants to Raise Interest Rates, Then It

question 101

Multiple Choice

If the Fed wants to raise interest rates, then it can use its open market operations to:

• A) increase the money supply.
• B) decrease the money supply.
• C) increase money demand.
• D) decrease money demand.

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Definitions:

Context Effects

The influence of environmental factors on one's perception or understanding of a stimulus.

Perceptual Set

A readiness to perceive or interpret stimuli in a particular way based on expectations, experiences, emotions, and culture.

Weber's Law

A principle stating that the smallest change in a physical stimulus that can be detected is a constant proportion of the stimulus level.

Masking Stimulus

A stimulus used to interfere with the perception of another stimulus, often used in research to study attention and perception processes.