A Requirement of a Good Operating Target Is That the Fed

question 13

Multiple Choice

A requirement of a good operating target is that the Fed can exert substantial control over its level and changes. If the rate were to rise above the level that the Fed thought conducive to economic growth and high employment, the Fed would ________.

• A) engage in open market purchases and not inject reserves into the banking system.
• B) engage in open market purchases and inject reserves into the banking system.
• C) not engage in open market purchases but would inject reserves into the banking system.
• D) neither engage in open market purchases nor inject reserves into the banking system.

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Definitions:

Voucher

Any document that serves as proof of authority to pay cash or issue an electronic funds transfer, but for many businesses is a special form used to record data about a liability and the details of its payment.

Cash Payment

A financial transaction involving the outflow of cash from one party to another as a form of payment.

Internal Control

Methods and protocols established by an organization to guarantee the reliability of financial and accounting data, foster responsibility, and avert deceit.

Record-Keeping Function

The process of maintaining a record of business transactions and financial activities for future reference.