When the Fed Buys Bonds and Injects Additional Reserves into the Banking

question 16

Multiple Choice

When the Fed buys bonds and injects additional reserves into the banking system, this action will

• A) place downward pressure on short-term interest rates.
• B) cause many decision makers to expect that the future rate of inflation will fall.
• C) place upward pressure on both short-term and long-term interest rates.
• D) place upward pressure on short-term interest rates and downward pressure on long-term interest rates.

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Definitions:

Embryonic Membrane

Membranes such as the amnion and chorion that develop during embryogenesis to protect and nourish the embryo.

Watery Sac

A fluid-filled bladder or cyst that can form in various parts of the body, often benign.

Primitive Streak

Ectodermal ridge in the midline of the embryonic disk, from which arises the mesoderm by the inward and then lateral migration of cells.

Epiblast Cells

Cells in the early embryo that give rise to the tissues of the body.