If the Fed Is Targeting Interest Rates and Money Demand

question 26

Multiple Choice

If the Fed is targeting interest rates and money demand increases,an appropriate policy response would be to

• A)increase reserve requirements.
• B)increase the discount rate.
• C)buy U.S. Treasury securities from government bond dealers.
• D)increase government spending.
• E)none of the options

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Definitions:

Fewer Labor Hours

A reduction in the amount of time workers spend engaged in productive activities, usually measured on a weekly or annual basis.

Iceland

An island country in the North Atlantic, known for its dramatic landscape of volcanoes, geysers, hot springs, and lava fields.

Export Goods

products or services that are produced domestically but sold to buyers in other countries.

Acquire Dollars

The process of obtaining U.S. currency, which can involve exchanging foreign money, earning it, or investing.