Once a ________ Is Chosen, the Main Tool the Federal

question 14

Multiple Choice

Once a ________ is chosen, the main tool the Federal Reserve uses to change the money supply is ________.

• A) federal funds rate; open-market operations
• B) federal funds rate; changing the discount rate
• C) tax rate; changing the exchange rate
• D) number of dollars in circulation; changing the reserve rate
• E) discount rate; borrowing money from the federal government

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Definitions:

Investment Amounts

The total funds allocated by individuals or businesses towards investment vehicles like stocks, bonds, or real estate for the purpose of earning returns.

Required Rate

The minimum return or yield that investors expect to receive on an investment, taking into account the risk level and market conditions.

Cost of Capital

The rate of return a company must earn on its investments to satisfy its investors or lenders.

Hurdle Rate

The minimum rate of return that an investment project must generate before it is considered viable or attractive for investment.