If the Fed Wishes to Increase Nominal Interest Rates, It

question 2

Multiple Choice

If the Fed wishes to increase nominal interest rates, it must engage in an open market ________ of bonds that ________ the money supply.

• A)sale; increases
• B)sale; decreases
• C)sale; does not change
• D)purchase; increases

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Definitions:

Cash Operating Costs

Direct expenses incurred during regular operations, such as manufacturing costs, labor, and raw materials, excluding non-cash costs like depreciation.

Automating

involves the use of systems and technology to perform tasks with minimal human intervention.

Internal Rate Of Return

A financial metric used to evaluate the profitability of an investment, calculated as the discount rate that makes the net present value (NPV) of all cash flows from the investment equal to zero.

Discount Factor(s)

A multiplier for determining the present value of future cash flows or other investments, reflecting the time value of money.