Everything Else Held Constant,in the Market for Reserves,decreases in the Interest

question 56

Multiple Choice

Everything else held constant,in the market for reserves,decreases in the interest rate paid on excess reserves affect the federal funds rate

• A)when the funds rate is below the interest rate paid on excess reserves.
• B)when the funds rate equals the interest rate paid on excess reserves.
• C)when the funds rate is below the discount rate.
• D)when the funds rate equals the discount rate.

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Definitions:

Budget Line

A graphical depiction of all possible combinations of two goods that a consumer can afford given their income and the prices of the goods.

Money Income

The total amount of monetary earnings received by an individual or household, including wages, salaries, and investment returns.

Fixed

Relates to assets or costs that do not change with the level of production or business activity in the short term.

Linear

A term describing something arranged in or extending along a straight or nearly straight line.