Which of the Following Policies Is Most Frequently Adopted When

question 14

Multiple Choice

Which of the following policies is most frequently adopted when the Fed is attempting to adjust the money supply?

• A)Changing reserve requirements
• B)Open market operations
• C)Changing the discount rate
• D)Changing the interest rate it pays on reserves
• E)Changing the federal funds rate

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Definitions:

Consumption Function

An economic formula representing the relationship between total consumption and gross national income, indicating how changes in income affect spending.

Aggregate Income

The sum of earnings for all people and organizations within a specific economic system.

Consumption Function

A mathematical expression in economics showing how total consumption is related to the gross national income.

Consumption Function

A financial equation that illustrates the correlation between overall consumption and the gross national income.