When the Fed Raises the Federal Funds Rate

question 7

Multiple Choice

When the Fed raises the federal funds rate

• A) net exports increase.
• B) the value of the dollar falls on the foreign exchange market.
• C) the value of the dollar rises on the foreign exchange market.
• D) consumption increases.

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Definitions:

Dividends Paid

The total amount of dividends that a company distributes to its shareholders during a specific period.

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments not included in cash equivalents.

Cash Outflow

The movement of money out of a business, typically as expenses or investments, resulting in a decrease in the company’s cash and cash equivalents.

Repay Principal

The process of paying back the original amount of money borrowed, not including interest, from a lender or creditor.