If the Fed Uses the Federal Funds Rate as an Interest

question 43

Multiple Choice

If the Fed uses the federal funds rate as an interest rate target,an increase in the demand for reserves will result in a(n) ________ in ________.

• A) increase; nonborrowed reserves
• B) decrease; nonborrowed reserves
• C) increase; the federal funds interest rate
• D) decrease; the federal funds interest rate

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Definitions:

Assumptions

Beliefs or principles accepted as true without proof, often forming the basis for further reasoning or behavior.

Analogies

Cognitive processes that identify similarities between two different ideas or objects, facilitating understanding and problem-solving.

Natural Selection

The process by which biological traits become more or less common in a population due to consistent effects on the survival and reproduction of their bearers.

Evolutionary

Pertaining to the process of natural selection and adaptation over generations, affecting the development of biological species.