In March 2013 the Fed Announced That It Might Decrease

question 83

Multiple Choice

In March 2013 the Fed announced that it might decrease its open market purchases of securities by the end of the year. This announcement suggests that the Fed is concerned that

• A) the unemployment rate will increase.
• B) the inflation rate will rise.
• C) the federal funds interest rate will fall too low for the Fed to control it.
• D) the federal funds interest rate will rise too high for the Fed to control it.

---

Definitions:

Normal Curve

A symmetric, bell-shaped curve representing the distribution of a set of data where most occurrences take place near the mean and probabilities for values taper off equally on both sides.

Continuity Correction

An adjustment made when approximating a discrete distribution with a continuous distribution.

Normal Approximation

A method of estimating the distribution of a sample statistic using the normal distribution, often applied when the sample size is large.

Binomial

Pertaining to a probability distribution or experiment where each trial has two possible outcomes.