Open Market Purchases by the Fed

question 148

Multiple Choice

Open market purchases by the Fed

• A) raise the federal funds rate.
• B) increase bank reserves.
• C) occur when the Fed wants to decrease the quantity of money.
• D) All of the above answers are correct.

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Definitions:

Sympathetic Activity

Part of the autonomic nervous system responsible for the body's 'fight or flight' response, regulating heart rate, blood pressure, and energy release.

General Adaptation Syndrome

The process of physiological stress response consisting of three stages: alarm, resistance, and exhaustion, described by Hans Selye.

Alarm Reaction Stage

The initial phase of the stress response, where the body mobilizes its resources to cope with a stressor, characterized by the activation of the sympathetic nervous system.

Resistance Stage

The second phase of the general adaptation syndrome, where the body adapts to a stressor with increased resistance but at a cost to its resources.