If the Federal Reserve Wished to Engage in Contractionary Monetary

question 89

Multiple Choice

If the Federal Reserve wished to engage in contractionary monetary policy it could

• A)increase the primary credit rate.
• B)purchase government debt.
• C)lower the reserve ratio.
• D)lower the Federal Funds rate target.

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Definitions:

Market Rate

The current interest rate offered in the market for securities or loans.

Coupon Rate

The annual interest rate paid by bond issuers on the bond's face value.

Yield To Maturity

The total return anticipated on a bond if the bond is held until it matures, considering all interest payments and the repayment of principal.

Discount

The reduction applied to the original price of goods or services, often to encourage sales.