If the Federal Reserve raises the federal funds rate, what is likely to happen? a. There will be more money available for investment and growth. — Consider This: An increase in the federal funds rate will slow down the economy by increasing the cost of borrowing, b. Inflation will increase, and unemployment will decrease. c. Both inflation and unemployment will decrease. d. There will be less money available for investment and growth.

There will be more money available for investment and growth More test answers on https://studyhippo.com/pols-155-final-study-guide/

If the Federal Reserve raises the federal funds rate, what will likely happen to certificates of deposit offered by banks?

The interest rate offered will increase More test answers on https://studyhippo.com/2-10-module-2-exam/

The Taylor rule for federal funds rate targeting does which of the? following?

It links the? Fed’s target for the federal funds rate to economic variables. More test answers on https://studyhippo.com/econ-quiz-15/

How does lowering the target for the federal funds rate? “pour money” into the banking? system?

To increase the money? supply, the Fed buys bonds on the open? market, which increases bank reserves. More test answers on https://studyhippo.com/econ-quiz-15/

The federal funds rate is established on a semiannual basis by the board of governors of the Federal Reserve.

Which of the following statements is False? More test answers on https://studyhippo.com/business-101-chapter-161718/

Economists closely watch the important federal funds rate. This is the interest rate

that commercial banks charge when they make short-term loans to other commercial banks. More test answers on https://studyhippo.com/economics-pretest/

The Fed can increase the federal funds rate by

selling Treasury bills, which decreases bank reserves. More test answers on https://studyhippo.com/econ-6/

When imported goods exceed exported goods, the effect on the balance of trade in the United States is called the ______. a. federal funds rate b. budget deficit c. national debt — Consider This: The United States importing more than it exports contributes to the debt, but it does not cover the totality of it. d. trade deficit

trade deficit More test answers on https://studyhippo.com/pols-155-final-study-guide/

What is the federal funds rate?

1. the interest rate banks charge each other for overnight loans 2. set by the Federal Open Market Committee after each meeting More test answers on https://studyhippo.com/econ-chapter-26/

What is the relationship between the federal funds rate falling and the money supply? increasing?

to decrease the federal funds? rate, the Fed must increase the money supply. More test answers on https://studyhippo.com/econ-quiz-15/

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Federal Funds Rate Flashcards, test questions and answers

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What is Federal Funds Rate?

The Federal Funds Rate is the interest rate that banks charge each other to borrow money from one another. It is an important factor in the economy, as it affects the cost of borrowing for consumers and businesses alike. It is also used by central banks to influence monetary policy, and ultimately economic activity.The Federal Funds Rate is set by the US Federal Reserve (the Fed). The Fed adjusts the rate based on its economic outlook, taking into account a variety of factors including inflation, unemployment levels, and economic growth. When the Fed believes there may be too much economic activity or inflationary pressures in the economy, they can increase the rate to reduce demand for loans and slow down spending. If they believe there might not be enough lending or investment taking place in an economy they can lower rates to encourage more lending. As interest rates change so does consumer behavior – when rates are low people tend to borrow more money for purchases such as homes or cars due to increased affordability; when rates are higher people may delay major purchases until conditions improve. Businesses will also react differently depending on changes in interest rates – low interest rates allow businesses access to cheaper capital which often leads them to invest in new projects or expand operations; high interest rates can make borrowing more expensive which could slow down business growth and expansion plans. Changes in federal funds rate also have impacts on foreign exchange markets as investors adjust their portfolios accordingly when domestic interests rise relative to those internationally investors will buy dollars with foreign currencies causing an appreciation of USD value compared with other currencies; alternatively when domestic interests are lower than elsewhere investors will sell dollars weakening its value against foreign currencies. In conclusion, the federal funds rate plays a critical role in influencing monetary policy and overall economic activity it affects both consumer behavior as well as business decisions while having a direct impact on currency markets both domestically and internationally.