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Suppose,at a Given Federal Funds Rate,there Is an Excess Demand

question 74

Multiple Choice

Suppose,at a given federal funds rate,there is an excess demand for reserves in the federal funds market. If the Fed wants the federal funds rate to stay at that level,then it should undertake an open market ________ of bonds,everything else held constant. If the Fed does nothing,however,the federal funds rate will ________.


Definitions:

Epiglottis

A flap of tissue at the root of the tongue that is depressed during swallowing to cover the opening of the windpipe and prevent food from entering the lungs.

Larynx

The voice box located in the throat, responsible for producing vocal sounds, protecting the trachea during swallowing, and regulating airflow to the lungs.

Chronic Bronchitis

Inflammation of the bronchi in the lungs that is usually caused by smoking or exposure to environmental contaminants.

Mucus

A slippery secretion produced by mucous membranes and glands for protection and lubrication in various parts of the body.

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