To change the federal funds rate, the Fed
A) coordinates with banks on establishing the new rate.
B) tells banks how much to charge.
C) uses open market operations to change the quantity of reserves.
D) changes the income tax rate on interest income.
E) increases or removes money from the stock market.
C
You might also like to view...
If the economy is at point R, most likely this economy is experiencing __________.
Private goods are ________
A) excludable but non-rival in consumption B) non-excludable and non-rival in consumption C) non-excludable but rival in consumption D) excludable and rival in consumption
Exhibit 7-3 A marginal product curve
As shown in Exhibit 7-3, the law of diminishing returns applies where there are:
A. more than 5 workers per day. B. fewer than 2 workers per day. C. fewer than 5 workers per day. D. between 2 and 5 workers per day.
In addition to open market operations and the required reserve ratio, another tool of monetary policy available to the Fed is
A. fiscal policy. B. government spending and various transfer-payment programs. C. the difference between the discount rate and the federal funds rate. D. tax rates and the progressivity of the income-tax system.