The Federal Reserve's Policy to "Lean Against the Wind" Means

question 49

Multiple Choice

The Federal Reserve's policy to "lean against the wind" means that

• A) interest rates are decreased as the economy expands.
• B) reserve requirements are decreased as the economy expands.
• C) reserve requirements are decreased significantly during an economic expansion.
• D) interest rates are increased gradually as the economy expands.

---

Definitions:

Order of Liquidity

Refers to the sequence in which assets are ranked based on how quickly they can be converted into cash, with cash being the most liquid asset.

Accounts Payable

A liability to a creditor, carried on open account, usually for purchases of goods and services.

Notes Payable

Financial obligations represented by formal written agreements to pay specified amounts at determined future dates.

Salaries and Wages Payable

Salaries and wages payable are current liabilities recorded on a company's balance sheet, representing the amount owed to employees for work performed that has not yet been paid.