All of the Following Help Provide the Basis for the Fed

question 65

Multiple Choice

All of the following help provide the basis for the Fed controlling the real interest rate in the IS-MP model EXCEPT

• A) the Fed controls the federal funds rate through open market operations.
• B) if expected future inflation remains stable, changes in nominal interest rates reflect changes in real interest rates.
• C) short-term and long-term interest rates tend to move together.
• D) the Fed's increased use of TIPS in conducting monetary policy.

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Definitions:

Autonomic Nervous System

The part of the nervous system that controls involuntary bodily functions, including heart rate, digestion, and respiratory rate.

Stress Response

The body's reaction to any demand or challenge, which can be a physical, mental, or emotional reaction.

Cortisol

A steroid hormone released by the adrenal glands in response to stress or low blood-glucose concentration; it plays a key role in the body's stress response.

Oxytocin

A hormone and neurotransmitter that plays a role in social bonding, reproduction, childbirth, and the period after childbirth.