Through Its ________ That Lower or Raise the Level of Excess

question 39

Multiple Choice

Through its ________ that lower or raise the level of excess reserves in the banking system, the Fed will often change the fed funds rate as part of its effort to change the rate of activity in the country's economy.

• A) open market operations
• B) banking market functions
• C) excess reserve procedures
• D) market activity operations

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Definitions:

APS

Average Propensity to Save, the proportion of total income that is saved by the economy or an individual.

Consumption

Pertains to the aggregate volume of products and services that are purchased and consumed by families and people.

MPC

The marginal propensity to consume, which is the fraction of additional income that a household spends on consumption.

Disposable Income

Financially viable resources for households' spending and saving strategies after deducting income taxes.