When the Fed Embarked on a Policy Known as Quantitative

question 53

Multiple Choice

When the Fed embarked on a policy known as quantitative easing,they

• A)slowly lowered the federal funds rate target until it was equal to zero.
• B)reduced the required reserve ratio by one-quarter point per month for 12 months.
• C)bought longer-term securities than are usually bought in open market operations.
• D)opened up lending to primary dealers,commercial banks,and investment banks.

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Definitions:

Excess Capacity

A scenario where a company's production facilities are capable of producing more than is needed to meet the demand.

Market-Based Transfer Prices

Transfer prices set based on market prices for similar goods or services, used in transactions between company divisions.

Suboptimal Decision

A decision that does not achieve the best possible outcome or maximizes the potential value.

Divisional Autonomy

The extent to which individual divisions or units within a larger organization are given the freedom to operate independently and make their own strategic decisions.