Under Which Circumstance Is the Fed Most Likely to Carry

question 72

Multiple Choice

Under which circumstance is the Fed most likely to carry out a defensive open market operation?

• A) to prevent an increase in inflation
• B) if a snowstorm results in a delay in check clearing, resulting in an increase in the Federal Reserve float
• C) to defend the value of the U.S. dollar on the foreign exchange market
• D) to prevent the negative impact of a demand shock

---

Definitions:

Instrument

A formal legal document that records a right, duty, or the execution of a transaction, such as contracts, deeds, and promissory notes.

UCC

Short for Uniform Commercial Code, a comprehensive set of laws governing commercial transactions in the United States, including sales, leases, negotiable instruments, and secured transactions.

Signature

A person's name or mark written by themselves, used as a proof of intention and identity in a document.

Laborer's Pension Fund

A retirement fund specifically designed for the benefit of labor union members.