One Reason the Target Federal Funds Rate May Not Equal

question 82

Multiple Choice

One reason the target federal funds rate may not equal the actual federal funds rate is because:

• A)There is no way that the Fed could keep the actual rate at the target rate
• B)The target rate changes with the demand for reserves
• C)Attaining the target rate involves forecasting reserve demand and forecasts are subject to error
• D)None of the answers is correct; the target and the actual federal funds rates are always equal

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Definitions:

Law of Negotiable Instruments

A branch of law that deals with the rights and duties of parties to documents like checks, bills of exchange, and promissory notes.

Assignable

Capable of being transferred or made over to someone else, typically referring to rights or property.

Holder in Due Course

A legal term referring to a person who has acquired a negotiable instrument in good faith for value and without notice of any defects in title.

Parties

Individuals or entities involved in a legal proceeding, contract, or agreement.