If the Fed Wanted to Use All Four of Its

question 105

Multiple Choice

If the Fed wanted to use all four of its major monetary control tools to decrease the money supply, it would

• A) buy bonds, reduce the discount rate, reduce reserve requirements, and reduce the interest rate paid on excess reserves.
• B) sell bonds, reduce the discount rate, reduce reserve requirements, and reduce the interest rate paid on excess reserves.
• C) sell bonds, increase the discount rate, increase reserve requirements, and increase the interest rate paid on excess reserves.
• D) buy bonds, increase the discount rate, increase reserve requirements, and increase the interest rate paid on excess reserves.

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Definitions:

Situational Factors

Environmental circumstances or conditions that can affect behavior and decision-making.

Setbacks

Obstacles or reversals in progress that delay or prevent the achievement of goals.

Stressful Circumstances

Situations or periods causing significant stress, often due to pressure, uncertainty, or the demands placed upon an individual.

Optimists

Individuals who generally expect positive outcomes and focus on the good aspects of life.