If the Fed Lowers the Discount Rate at the Same

question 124

Multiple Choice

If the Fed lowers the discount rate at the same time it conducts an open market sale,it follows that

• A) the money supply will fall.
• B) the money supply will rise.
• C) the money supply will remain unchanged.
• D) cash leakages will rise.
• E) There is not enough information to answer this question.

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Definitions:

Random Sample

A selection of individuals from a population where each individual has an equal chance of being chosen, ensuring the sample represents the population well.

Statistics Canada

Canada's national statistical agency tasked with compiling data on the country's economy, society, and environmental conditions.

Alpha

In statistics, it represents the level of significance, marking the threshold for rejecting the null hypothesis; in finance, it denotes the active return on an investment compared to a benchmark index.

Power of the Test

The power of the test refers to the probability that the test correctly rejects a false null hypothesis, effectively detecting an actual effect when it exists.