Which of the Following Tools Does the Fed Use to Help

question 16

Multiple Choice

Which of the following tools does the Fed use to help protect depositors who may want to withdraw their money without notice?

• A)Discount rate
• B)Interest rate
• C)Open market operation
• D)Reserve requirement

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Definitions:

Total Fixed Cost

The sum of all costs that remain constant regardless of the level of production or output in the short term.

Variable Cost

Costs that vary in total with changes in the level of production or other business activities.

Market Price

The existing cost for purchasing or selling an asset or service on the open market.

Purely Competitive Market

A market structure characterized by many buyers and sellers, all of whom sell identical products, which results in the agents having no control over prices.