The Primary Tools That the Federal Reserve Uses to Influence

question 16

Multiple Choice

The primary tools that the Federal Reserve uses to influence private spending are

• A)changes in taxes.
• B)changes in government purchases.
• C)changes in financial regulations.
• D)changes in interest rates.
• E)changes in stock prices.

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Definitions:

Consolidation

The process of combining the financial statements of separate companies into a single, aggregated financial statement.

Consolidated Retained Earnings

The cumulative amount of earnings of a corporation and its subsidiaries after dividends have been paid, as reported in consolidated financial statements.

Retained Earnings

The portion of net profits left in the company after dividends have been paid to shareholders.

Voting Shares

Shares that give the shareholder the right to vote on matters of corporate policy and the election of board members.