Suppose That the Current Federal Funds Rate Is Below the Federal

question 21

Multiple Choice

Suppose that the current federal funds rate is below the federal funds target rate.In order to raise the federal funds rate the Fed will ________________ securities on the open market which will ________________ the supply of reserves in the market for reserves,pushing the rate closer to the target rate.

• A) sell; increase
• B) purchase; increase
• C) purchase; decrease
• D) sell; decrease

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Definitions:

State Governments

The governing bodies of individual states within a country, responsible for local legislation and governance.

SCHIP

The State Children's Health Insurance Program, which provides health coverage to uninsured children in families with incomes that are modest but too high to qualify for Medicaid.

Low-Income Families

Households earning significantly less income than the average, often struggling to meet basic needs.

Poverty Threshold

The bare minimum income needed to sustain an acceptable living standard within a particular country.