If the Fed Uses Nonborrowed Reserves,a Reserve Aggregate,as a Target,an

question 76

Multiple Choice

If the Fed uses nonborrowed reserves,a reserve aggregate,as a 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:

Consumer Surplus

The contrast between what buyers are willing to offer for a good or service and the amount they actually spend.

Willingness to Pay

The maximum amount an individual is prepared to expend on a good or service to acquire it.

Cell Phone

A portable telephone that uses wireless technology to send and receive calls and data.

Demand Curve

A graph showing the relationship between the price of a good or service and the quantity of it that consumers are willing to purchase at different prices.