Which of the Following Options Would Be Most Likely to Cause

question 47

Multiple Choice

Which of the following options would be most likely to cause an increase in short-term real interest rates?

• A) The Federal Reserve cuts the discount rate.
• B) The Federal Reserve lowers the reserve requirement.
• C) The Federal Reserve sells bonds in the open market.
• D) The federal budget is shifted toward a surplus.

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Definitions:

Heuristics

Simple, efficient rules or methods used to make judgments and decisions based on limited information, often leading to satisfactory but not always optimal solutions.

Behavioral Economics

A field of study merging insights from psychology and economics to explore how people make decisions and how these decisions can deviate from those predicted by standard economic theories.

Behavioral Economics

An area within economics that examines the impact of psychological, cognitive, emotional, cultural, and social influences on the economic choices made by individuals and organizations.

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