Everything Else Held Constant,in the Market for Reserves,when the Federal

question 32

Multiple Choice

Everything else held constant,in the market for reserves,when the federal funds rate is 5%,lowering the discount rate from 5% to 4%

• A)lowers the federal funds rate.
• B)raises the federal funds rate.
• C)has no effect on the federal funds rate.
• D)has an indeterminate effect on the federal funds rate.

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Definitions:

Delta G

The change in Gibbs free energy, predicting the direction of chemical reactions and their spontaneity.

Free Energy

A thermodynamic quantity that represents the amount of energy in a system that is available to do work.

Reactants

Substances initially present in a chemical reaction that are consumed during the reaction to create products.

Endergonic Reactions

Chemical reactions that require an input of energy to proceed and are characterized by a positive change in free energy.