One Outcome That Would Result If the Fed Paid Interest

question 16

Multiple Choice

One outcome that would result if the Fed paid interest on reserves would be:

• A)banks would hold less excess reserves.
• B)the federal government's deficit would be larger (or surplus smaller).
• C)banks would no longer hold excess reserves.
• D)the target federal funds rate would have to be fixed at a constant rate.

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Definitions:

Bronchial Tree

A series of tubes that begins where the distal end of the trachea branches.

Pharynx

The muscular tube that connects the mouth and nasal passages with the esophagus and larynx, involved in breathing, swallowing, and speaking.

Inspiratory Reserve Volume

The additional amount of air that can be forcibly inhaled after the completion of a normal inspiration.

Inspiratory Capacity

The maximum amount of air an individual can inhale after completing a normal, restful exhalation, important in respiratory assessments.