The Most Important Advantage of Discount Policy Is That the Fed

question 30

Multiple Choice

The most important advantage of discount policy is that the Fed can use it to

• A)precisely control the monetary base.
• B)perform its role as lender of last resort.
• C)control the money supply.
• D)punish banks that have deficient reserves.

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Definitions:

Faithful Representation

A qualitative characteristic of financial information that ensures the information depicts the economic phenomenon it intends to represent, without error or bias.

Fair Value

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

Going Concern

The assumption that a company will continue in operation for the foreseeable future.