If Reserve Demand Is Volatile, in Order for the Central

question 111

Multiple Choice

If reserve demand is volatile, in order for the central bank to keep interest rates from being volatile, it must:

• A)Target the quantity of reserves
• B)Set targets for both interest rates and the quantity of reserves
• C)Not target the interest rates
• D)Let the quantity of reserves fluctuate

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Definitions:

Rescission

The act of canceling a contract and returning all parties involved to their pre-contractual state, often due to fraud or mistake.

Contract

A legally binding agreement between two or more parties that outlines rights and duties each party is obliged to fulfill.

Duress

A condition wherein a person performs an act as a result of violence, threat, or other pressure against the person.

Non-lawyer

An individual who is not licensed to practice law or offer legal advice.