In the Market for Reserves,if the Federal Funds Rate Is

question 26

Multiple Choice

In the market for reserves,if the federal funds rate is between the discount rate and the interest rate paid on excess reserves,a decline in the reserve requirement ________ the demand of reserves,________ the federal funds rate,everything else held constant.

• A)decreases;lowering
• B)increases;lowering
• C)increases;raising
• D)decreases;raising

---

Definitions:

Constant Growth

A model assuming that dividends, earnings, or other financial metrics grow at a steady, unchanging rate indefinitely.

Balance Sheet

A financial statement showing a company's assets, liabilities, and equity at a specific point in time, providing a snapshot of its financial condition.

Capital Structure

The mix of different types of debt and equity a company uses to finance its operations.

New Common Stock

Shares issued by a company for the first time to the public, typically through an Initial Public Offering (IPO) or additional issuance.