The Federal Open Market Committee

question 24

Multiple Choice

The Federal Open Market Committee

• A)operates with almost complete discretion over monetary policy.
• B)is required to increase the money supply by a given growth rate each year.
• C)is required to keep the interest rate within a range set by Congress.
• D)is required by its charter to change the money supply using a complex formula that concerns the tradeoff between inflation and unemployment.

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Definitions:

Face Value

The nominal value printed on a financial instrument like a bond or stock certificate, not necessarily its market value.

Interest Rate

The interest rate is the proportion, typically expressed as a percentage, at which interest is paid by borrowers for the use of money that they borrow from a lender.

Present Discounted Value

The immediate value of a forthcoming sum of money or cash flow streams, discounted at a specific rate of return.

Interest Rate

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, or the return on invested capital.