Suppose on Any Given Day There Is an Excess Supply

question 6

Multiple Choice

Suppose on any given day there is an excess supply of reserves in the federal funds market. If the Federal Reserve wishes to keep the federal funds rate at its current level,then the appropriate action for the Federal Reserve to take is a ________ open market ________,everything else held constant.

• A)defensive;sale
• B)defensive;purchase
• C)dynamic;sale
• D)dynamic;purchase

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Definitions:

Social Security Taxes

Taxes collected from employees and employers to fund the Social Security program, which provides benefits for retirees, disabled workers, and survivors.

Advance Payments

Payments made before goods or services are received, often as a show of faith or to secure a particular transaction.

Estimated Federal

An approximation related to the United States federal government, often referring to projected budgets, taxes, or revenues.

State Income Taxes

Taxes levied by individual states on the income earned by residents or entities within their jurisdiction.