The Larger the Supply of Reserves and the Lower the Fed

question 55

Multiple Choice

The larger the supply of reserves and the lower the Fed funds rate, the

• A)higher the concern about the economy.
• B)higher the interest rate.
• C)higher the monetary growth rate.
• D)lower the monetary growth rate.

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Definitions:

Production Possibility Frontier

A curve representing the maximum combinations of goods or services that can be produced with limited resources.

Bowed Out

A description usually of production possibilities frontier that shows increasing opportunity costs.

Command Economy

An economic system in which the government or central authority makes all decisions about the production and distribution of goods and services.

Centralized

A system or organization where decision-making and administrative processes are concentrated at a single point or center.