Generally, the prime interest rate:
A. moves in the opposite direction as the federal funds rate.
B. remains constant over long periods of time.
C. is highly inflexible downward.
D. moves in the same direction as the federal funds rate.
D. moves in the same direction as the federal funds rate.
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What will be an ideal response?
During the financial crisis of 2007–2009, why did the Federal Reserve begin to utilize various types of unconventional monetary policy?
A. The federal funds rate had already been increased as much as possible. B. The discount rate had already been increased as much as possible. C. The federal funds rate had already been reduced to zero. D. The discount rate had already been reduced to zero.
To curb the problem of voters wanting immediate benefits and deferred costs, many state governments in the United States have:
A. made unfunded liabilities illegal. B. resorted to greater use of monetary policy. C. passed laws requiring balanced budgets. D. stopped using fiscal policy.
If the interest rate increases, there is a(n)
A. increase in the demand for money. B. increase in the quantity of money demanded. C. decrease in the demand for money. D. decrease in the quantity of money demanded.