Federal Reserve Open Market Operations, Setting Reserve Requirement, and Lending

question 72

Multiple Choice

Federal Reserve open market operations, setting reserve requirement, and lending to depositories are:

• A)usually conducted simultaneously
• B)designed to improve the federal deficit
• C)of equal importance in their effort
• D)functions shared with the U.S.Treasury
• E)none of the above

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Definitions:

Purchasing Power Parity

An economic theory that compares different countries' currencies through a "basket of goods" approach to assess the relative value of the currencies.

Corn Price

The market value at which corn, a major agricultural commodity, is traded.

Inflation Rate

The percentage rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.

Quantitative Easing

A monetary policy used by central banks to increase the money supply by buying government securities or other securities from the market.