If the Federal Funds Rate Is Below Its Target, the Fed

question 45

Multiple Choice

If the federal funds rate is below its target, the Fed is likely to_____ securities in the open market, which will cause the federal funds rate to_____ .

• A)buy; increase
• B)buy; decrease
• C)sell; decrease
• D)sell; increase

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Definitions:

Limited Partnership

A business arrangement where one or more partners are liable only up to the amount of their investment, while at least one partner has unlimited liability.

Perpetual Life

The concept that an entity, usually a corporation, continues to exist indefinitely until it is legally dissolved, regardless of changes in ownership or management.

Limited Liability

A legal structure where a company's owners are protected from losing more money than they have invested in the company.

Interest Rate

The interest rate is the proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.