If the Fed Wanted to Use All Four of Its

question 105

Multiple Choice

If the Fed wanted to use all four of its major monetary control tools to decrease the money supply, it would

• A) buy bonds, reduce the discount rate, reduce reserve requirements, and reduce the interest rate paid on excess reserves.
• B) sell bonds, reduce the discount rate, reduce reserve requirements, and reduce the interest rate paid on excess reserves.
• C) sell bonds, increase the discount rate, increase reserve requirements, and increase the interest rate paid on excess reserves.
• D) buy bonds, increase the discount rate, increase reserve requirements, and increase the interest rate paid on excess reserves.

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Definitions:

Structural

Pertaining to the arrangement and relations between parts or elements of something complex.

Semantic

Pertaining to the meanings of words and symbols in language, dealing with understanding the meaning and structure of sentences.

Early-Selection Theories

Theories in cognitive psychology that suggest attention acts as a filter at an early stage of information processing, allowing only certain stimuli to reach awareness.

Sensory Input

The information that the brain receives from the senses, such as sight, sound, smell, touch, and taste.