In 2002, the Federal Reserve Changed Its Discount Lending Procedures

question 107

Multiple Choice

In 2002, the Federal Reserve changed its discount lending procedures.Which of the following statements is correct?

• A)For most of its history the Federal Reserve has lent reserve to banks at a rate equal to the target federal funds rate; after 2002 the rate would be below the target federal funds rate.
• B)The changes made in 2002 have made it more difficult for the Fed to meet its interest-rate stability objective.
• C)Before 2002 the Fed discouraged banks from borrowing and actually destabilized the interbank market for reserves.
• D)The Fed now controls the quantity of credit extended as well as its price.

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Definitions:

Long-Term Storage

The phase of memory in which information is held indefinitely in the brain for later retrieval.

Temporal Lobe

A region of the brain responsible for processing auditory information and is also involved in memory, speech, and the understanding of language.

Hippocampus

A region of the brain that is associated with memory formation, organization, and storage.

Explicit Memories

Memories that can be consciously recalled, such as facts and events, and are part of our declarative memory system.