If the Target Federal Funds Rate Reaches Zero the FOMC

question 55

Multiple Choice

If the target federal funds rate reaches zero the FOMC:

• A)Must stop purchasing securities since they cannot lower nominal rates below zero
• B)Would likely shift their focus to purchasing longer-term securities
• C)Would likely raise the required reserve rate
• D)Would likely raise the discount rate

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Definitions:

Turnover Reductions

Efforts or strategies aimed at decreasing the rate at which employees leave an organization and need to be replaced.

Labor Surplus

A labor surplus occurs when there are more workers available than jobs, leading to unemployment and underemployment.

Hiring Freeze

A temporary halt in the recruitment process of an organization aimed at reducing costs.

Pay Reduction

A decrease in the amount of money an employee is paid, often as a result of economic difficulties, performance issues, or restructuring within an organization.