The Demand Curve for Reserves Shifts to the Left and the Federal

question 45

Multiple Choice

The demand curve for reserves shifts to the left and the federal funds rate falls when the Fed

• A) decreases reserve requirements or does an open market purchase.
• B) lowers the discount rate.
• C) lowers the discount rate or does an open market purchase.
• D) decreases reserves requirements.
• E) does an open market sale.

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Definitions:

Stanley Milgram

An American social psychologist best known for his controversial experiments on obedience to authority conducted in the 1960s.

Obedience

The act of following orders or instructions, usually from an authority figure, without questioning.

Foot-In-The-Door Technique

A strategy designed to gain a favorable response to a small request at first, with the intent of making the person more likely to agree later to a larger request.

Compliance Strategy

Techniques designed to persuade or influence others to agree with one's requests, rules, or desires.