Everything Else Held Constant,in the Market for Reserves,when the Federal

question 84

Multiple Choice

Everything else held constant,in the market for reserves,when the federal funds rate is 3%,raising the discount rate from 5% to 6%

• A)lowers the federal funds rate.
• B)raises the federal funds rate.
• C)has no effect on the federal funds rate.
• D)has an indeterminate effect on the federal funds rate.

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Definitions:

Overall Operations

Refers to the comprehensive activities and processes undertaken by a business to produce and sell its products or services.

Overall Cost of Capital

The weighted average rate of return a company must pay to finance its assets, combining the cost of debt and equity funding.

Riskiest Operations

Business activities or projects that carry the highest level of uncertainty and potential for loss, often involving significant investment and exposure to volatile markets.

Divisions

Separate units or sections of a larger organization, often characterized by distinct operations, products, or markets.