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:

Noncumulative Quantity Discount

A pricing strategy where discounts are based on the quantity of a single purchase order rather than the total volume purchased over time.

Sprayers

Devices or equipment used to distribute liquids in a fine spray, commonly for watering plants, applying pesticides, or painting.

Free

Gratis; something provided without charge.

Trade Discount

A reduction in the listed price of goods or services offered by a vendor to buyers in the same trade.