The Fed Cannot Predict the Effects of Open Market Operations

question 108

Multiple Choice

The Fed cannot predict the effects of open market operations with perfect accuracy because of

• A)changes in people's desires for cash.
• B)foreigners desire to hold U.S.dollars.
• C)banks' desires to hold excess reserves.
• D)All of the above are correct.

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Definitions:

Medium Of Exchange

Anything that is widely accepted as a means for the payment of goods and services and repayment of debts.

Opportunity Cost

Represents the value of the best alternative that must be given up in order to pursue a certain action or decision.

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Specialization Of Labor

Focusing work effort on a particular product or a single task.