Article Summary Concerned About Slow Economic Growth, the Fed Announced in September

question 135

Multiple Choice

Article Summary
Concerned about slow economic growth, the Fed announced in September 2013 that it would postpone winding down its $85 billion a month bond purchasing program which has been a key component of its monetary stimulus package. Fed Chairman Ben Bernanke would not commit to a timeline for reducing the bond purchases, stating that the program was "not on a preset course." The Fed's forecasts of economic growth have been lowered for 2013 and 2014, and the Fed does not expect to raise interest rates until 2015. Since late 2008, the Fed has held its benchmark interest rate near zero, while its balance sheet has tripled to more than $3.6 trillion. The Fed also stated that so long as inflation did not become a threat, it would not raise interest rates until the unemployment rate dropped to 6.5 percent. At the time of the announcement, the unemployment rate was 7.3 percent.
Source: Pedro da Costa and Alister Bull, "Fed Surprises, sticks to stimulus as it cuts growth outlook," Reuters, September 18, 2013.

-Refer to the Article Summary.The Fed announced that it would postpone winding down its $85 billion per month bond purchasing program.The Fed's purchasing of long-term treasury bonds and other government-backed securities in an effort to keep long-term interest rates low is a strategy known as

• A)securitization.
• B)contractionary spending.
• C)indirect finance.
• D)quantitative easing.

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Definitions:

Heredity

The transmission of genetic traits from parents to offspring, the reason for familial resemblance.

Particulate

Made up of separate and discrete units or particles, often used in the context of matter or inheritance.

Blended

In genetics, this term traditionally referred to an outdated theory that offspring's traits are a smooth, average mix of parents' traits, replaced by the understanding of Mendelian inheritance.

Inheritance

The process through which assets, titles, debts, rights, and obligations are passed from one generation to the next upon the death of an individual.