If the Demand for Reserves Is Fixed, the Larger the Supply

question 2

Multiple Choice

If the demand for reserves is fixed, the larger the supply of reserves provided through open market operation, the

• A)higher the fed funds rate.
• B)greater the rediscount rate.
• C)higher the interest rate.
• D)lower the fed funds rate.

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Definitions:

Specialize

To concentrate on a particular area of study, work, or production, often to gain higher proficiency or efficiency.

Shirt

A shirt is a garment covering the upper body, with sleeves and typically a collar and buttons down the front, worn by both men and women.

Pie

A metaphorical representation of a total market or economy, which can be divided among participants.

Comparative Advantage

Comparative advantage is an economic principle that describes the ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than competitors.