The Federal Reserve Has More Impact on Interest Rates

question 45

Multiple Choice

The Federal Reserve has more impact on interest rates:

• A) in the long run than in the short run.
• B) when banks have a lot of excess reserve than when banks have zero excess reserve.
• C) when they are falling than when they are rising.
• D) in the short run than in the long run.

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Definitions:

Assets and Liabilities

The resources owned by a company or individual that have value (assets) and the obligations owed to others (liabilities).

Common Shares

Units of ownership in a corporation, giving holders a proportion of the voting rights and potential dividends.

Functional Currency

The currency that most influences sales prices, labor, and material costs, and is often the currency in which most of the business transactions are denominated.

Translation Rate

The exchange rate used to convert the financial statements of a foreign subsidiary to the reporting currency of the parent company.