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Question 16

Which one of the following points would be true?

A.

The total demand for money is inversely related to the interest
rate.

B.

A lower interest rate raises the opportunity cost of holding
money.

C.

Bond prices and the interest rate are directly related.

D.

The supply of money is directly related to the interest
rate.

4 points

Question 17

Which is the most important control used by the Federal Reserve
to regulate the money supply?

A.

the reserve ratio

B.

open-market operations

C.

interest on reserves

D.

the discount rate

4 points

Question 18

Lowering the reserve ratio

A.

changes required reserves to excess reserves

B.

increases the discount rate

C.

decreases the discount rate

D.

increases the amount of excess reserves banks must keep