The federal funds rate is
A. the interest rate on bonds issued by the federal government.
B. the interest rate paid on reserves held with the Fed.
C. the interest rate at which banks can borrow excess reserves from other banks.
D. none of these.
Answer: C
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All other things unchanged, we expect that a reduction in interest rates will tend to
A) increase the quantity of money demanded and increase velocity. B) increase the quantity of money demanded and reduce velocity C) reduce the quantity of money demanded and increase velocity. D) reduce the quantity of money demanded and reduce velocity.
The money multiplier formula _____.
(A) Is used by the Board of Governors to decide interest rate cuts. (B) Determines the amount of new money that will be created with each demand deposit. (C) Determines the amount of funds loaned by the Federal Reserve Bank to its members. (D) Is used by the Fed to determine the amount of currency in the economy.