When the Fed Reports a Large Monthly Decrease in the Money

question 96

Multiple Choice

When the Fed reports a large monthly decrease in the money supply, you can be reasonably sure that

• A)the decrease is due to prior open market sales.
• B)the decrease is due to the Fed's enormous influence on borrowing and lending.
• C)the decrease is due to a cumulative process linking the Fed's actions to the money supply.
• D)All of the above are correct.

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Definitions:

Maturity Value

The total amount due or payable at the end of a loan or investment period, including the principal and any accrued interest.

Daily Interest

Interest calculation method where interest is calculated daily on the principal amount, either leading to faster growth in savings accounts or quicker payoff in loans.

Simple Interest

A method of calculating interest where the interest charge is computed only on the principal amount and not on the interest that has accumulated.

Savings Account

A bank account where money is deposited for safekeeping, which earns interest over time.