What is the federal funds interest rate? If the Fed wants to use open market operations to lower the federal funds rate, what action should it take?

Explain.

*12. If the Fed wants to expand the money supply, why is it more likely to do so by purchasing bonds and other financial assets rather than by lowering reserve requirements?

*13. Are the following statements true or false?

a. “You can never have too much money.”

b. “When you deposit currency in a commercial bank, cash goes out of circulation and the money supply declines.”

c. “If the Fed would create more money, Americans would achieve a higher standard of living.”