The rate of interest charged by the Federal Reserve to member banks for reserves borrowed from the Fed is known as the:

If the Fed buys U.S. government securities from banks, the federal funds rate ________ and banks' reserves ________

A) does not change; increases B) falls; decrease C) rises; increase D) rises; decrease E) falls; increase

Interest payments on home mortgages and home equity loans are tax deductible. This tax deductibility encourages households to

a. shift other forms of debt to their home mortgage. b. increase the equity in their house. c. make larger payments and pay down their mortgage loan more rapidly. d. decrease the overall amount of household debt in relation to household income.