If the Fed Fears Inflation, Then the Fed

question 102

Multiple Choice

If the Fed fears inflation, then the Fed

• A) directs banks to lower the nominal interest rate.
• B) directs banks to raise the nominal interest rate.
• C) will sell government securities in the open market.
• D) will buy government securities in the open market.
• E) will increase the income tax rate on interest income.

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Definitions:

Median

A statistical measure that represents the middle value in a given series of numbers, dividing the dataset into two equal halves.

Mode

The value that appears most frequently in a data set, representing the most common outcome.

Variation

The occurrence of differing or changing characteristics within a species, population, or process, often leading to evolutionary adaptations or improvements in a species’ ability to survive.

Correlation Coefficient

A numerical measure that indicates the extent to which two variables fluctuate together.