If the Fed Wants to Increase the Quantity of Money

question 27

Multiple Choice

If the Fed wants to increase the quantity of money, it can

• A) increase the government budget deficit.
• B) purchase U.S. government securities.
• C) lower income tax rates.
• D) raise the exchange rate.

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Definitions:

Capitalize

The accounting practice of recording a cost or expense on the balance sheet for the purposes of delaying full recognition of the expense over time through depreciation or amortization.

Depreciate

To allocate the cost of a tangible asset over its useful life, reflecting the decline in the asset's value due to use and wear and tear.

Financial Statements

Reports that summarize the financial performance, position, and cash flows of a business over a specific period of time.

Endowment Contribution

A donation made to an institution or organization with the stipulation that it be invested and the principal remain intact, while the investment income can be used for organizational purposes.