If the Governing Council Decides to Decrease the Target for the Overnight

question 338

Multiple Choice

If the Governing Council decides to decrease the target for the overnight rate,it will:

• A) perform an open market purchase.
• B) perform an open market sale.
• C) increase the demand for money.
• D) offer tax breaks to specific businesses.

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Definitions:

Opportunity Cost

The cost of the next best alternative foregone as the result of making a decision.

Investment Project

A project undertaken by individuals, firms, or governments involving the allocation of resources to create future benefits, such as income or profit.

Recession

A provisional downturn in economic conditions, involving a downturn in professional and industrial engagements, typically marked by a sequential GDP fall in two quarters.

Private Domestic Investment

Expenditures by private (non-government) entities on domestic capital goods, including constructions and equipment, to produce goods and services in the future.