A perfectly contestable market is one which a firm can enter and exit without losing its investment

Targeting the federal funds rate allows the Fed some ability to control bank reserves and thus the money supply. Explain how each of the following tools allows the Fed to fine-tune its control of bank reserves

a. Conducting open market operations b. Changing the discount rate c. The ability to pay interest on reserves d. The Term Deposit Facility

If the interest rate is positive, the present value of $10 to be received in the future is

a. less than $10. b. equal to $10. c. more than $10. d. Any of the above is possible, depending on the interest rate and when the payment is to be received.