If the Fed Wanted to Use All Three of Its

question 1

Multiple Choice

If the Fed wanted to use all three of its major monetary control tools to decrease the money supply, it would:

• A) buy bonds, reduce the discount rate, and reduce reserve requirements.
• B) sell bonds, reduce the discount rate, and reduce reserve requirements.
• C) sell bonds, increase the discount rate, and increase reserve requirements.
• D) buy bonds, increase the discount rate, and increase reserve requirements.

---

Definitions:

Stable Attributions

The tendency to believe that an individual's behavior in a given situation is due to unchanging, enduring traits or abilities.

Close Relationship

A deeply connected, mutually influential bond between individuals, characterized by strong emotional ties and interdependence.

Power Imbalance

A situation where there is an unequal distribution of power among individuals or groups, leading to dominance by one party over another.

Correspondence Bias

The tendency to attribute a person's behavior too much to their disposition and not enough to the situation they are in.