If the Interest Rate Is Above a Central Bank's Target

question 52

Multiple Choice

If the interest rate is above a central bank's target, what should the central bank do?

• A) buy bonds to increase the money supply
• B) buy bonds to decrease the money supply
• C) sell bonds to increase the money supply
• D) sell bonds to decrease the money supply

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Definitions:

Lien Claimant

Describes a person or entity that has the right to keep possession of property belonging to another person until a debt owed by that person is discharged.

Loan Agreement

A legally binding contract between a borrower and a lender detailing the terms and conditions under which the loan is provided.

Guarantees

Written assurances that certain conditions will be fulfilled, often relating to the quality, durability, or performance of a product or service.

Breach of Contract

Occurs when one party fails to fulfill their obligations under the contract, allowing the other party to seek legal remedies.