An Incentive Is

question 142

Multiple Choice

An incentive is:

• A) the marginal cost of engaging in a course of action.
• B) the marginal benefit of engaging in a course of action.
• C) something that causes people to behave in a certain way by changing trade-offs they face.
• D) rational behavior that involves thinking on the margin.

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Definitions:

Monetary Policy

Actions undertaken by a central bank, such as the Federal Reserve, to control the money supply and interest rates to achieve macroeconomic objectives like controlling inflation, consumption, growth, and liquidity.

Federal Open Market Committee

The branch of the Federal Reserve System responsible for setting national monetary policy and interest rates.

Reserve Requirement

The minimum amount of deposits that a bank must hold in reserve and not lend out, which is set by the central bank as a means to control the money supply.

Open-Market Sales

Transactions where central banks sell securities in the open market to control the supply of money.