If the demand for bank loans suddenly declines, a defensive action on the part of the Fed to keep the federal funds rate constant would take the form of open market bond:
A. purchases that would prevent the federal funds rate from decreasing.
B. purchases that would prevent the federal funds rate from increasing.
C. sales that would prevent the federal funds rate from decreasing.
D. sales that would prevent the federal funds rate from increasing.
Answer: C
You might also like to view...
You borrow at a nominal interest rate of 10 percent. If the inflation rate is 4 percent, then the real interest rate is
A) 6 percent. B) 14 percent. C) the $10 in interest you have to pay. D) 16 percent. E) 2.5 percent.
Using the figure above, which of the following statements is (are) correct?
i. MR = MC when 3 haircuts are produced. ii. If the firm charges each customer the same price for a haircut, the price of a haircut is $42. iii. The firm's MC equals $30. A) i only B) ii only C) i and ii D) i and iii E) None of the above is correct.
If the nominal interest rate is 8 percent and the real interest rate is 5 percent, then the inflation premium is 13 percent.
Answer the following statement true (T) or false (F)
Developing countries have identified which key issues as important to them in current trade talks?
What will be an ideal response?