If Reserve Demand Is Volatile, in Order for the Central

question 44

Multiple Choice

 If reserve demand is volatile, in order for the central bank to keep interest rates from being volatile, it must: 

• A) target the quantity of reserves.?
• B) set targets for both interest rates and the quantity of reserves.?
• C) not target the interest rates.?
• D) let the quantity of reserves fluctuate.

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Definitions:

Bond Rating

An assessment of the credit quality of a bond by rating agencies, indicating its creditworthiness.

Capital Markets

Financial markets for buying and selling equity and debt instruments, including stocks and bonds, facilitating capital formation and growth.

Borrowing

The act of obtaining funds from a lender under the agreement to repay with interest.

Par Value

A nominal value assigned to a security, such as a share of stock, representing the minimum price at which the security can be issued.