In the Short Run, If the Fed Wants to Raise

question 101

Multiple Choice

In the short run, if the Fed wants to raise the federal funds rate, it

• A) instructs large commercial banks to sell government securities in the open market.
• B) instructs the New York Fed to sell government securities in the open market.
• C) tells large commercial banks to raise their interest rates.
• D) instructs the New York Fed to sell government securities in the foreign exchange market.
• E) instructs the New York Fed to buy government securities in the open market.

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Definitions:

Conventional Structure

A traditional or commonly accepted arrangement, pattern, or organization of something.

Correlated Stimulus

A stimulus that is consistently linked with another, often leading to an expectation of the second when the first is presented.

Conditioned Stimulus

A previously neutral stimulus that, after becoming associated with an unconditioned stimulus, eventually triggers a conditioned response.

Electric Can Opener

A kitchen device used to open metal cans automatically using an electric motor.