By Raising or Lowering the ______,The Fed Changes the Cost

question 32

Multiple Choice

By raising or lowering the ______,the Fed changes the cost of money for banks,which impacts the incentive to borrow reserves.

• A) Reserve ratio
• B) Discount rate
• C) Money multiplier
• D) Yield

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Definitions:

Open-Economy Macroeconomic Model

A framework used to analyze economies that engage in international trade of goods, services, and financial assets.

Tariff

A tax levied on imported and, less commonly, exported goods, used to regulate trade by increasing the price of foreign products to encourage or protect domestic industry.

Real Exchange Rate

The rate at which a person can trade goods and services of one country for those of another, adjusted for inflation.

Import Quota

A limit set by a government on the quantity of a specific good that can be imported into the country.