If the Fed Is Worried About Inflation and Wants to Raise

question 239

Multiple Choice

If the Fed is worried about inflation and wants to raise the interest rate, in the short run it can

• A) increase the demand for money.
• B) increase the quantity of money.
• C) decrease the demand for money.
• D) decrease the quantity of money.
• E) directly raise the interest rate without affecting either the demand for money or the supply of money.

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Definitions:

Novation

A legal process that involves the replacement of an existing obligation with a new one, transferring the rights and duties to a different party.

Anticipatory Breach

An action in contractual agreements where one party indicates they will not fulfill their contractual obligations before the due time.

Abandonment

The act of giving up a legal right or interest with the intention of never claiming it again, often seen in property or relationship contexts.

Contractual Obligations

Duties that parties are legally bound to perform as specified in a contract, the failure of which could lead to legal consequences.