In an Effort to Address the Troubled Economy

question 114

Multiple Choice

In an effort to address the troubled economy, ...ʺFor the ninth time in just over a year, the Federal Reserve is expected to cut interest rates, quite possibly its last reduction in this downturn.ʺ Rates have not been this low ʺ... since 2003, when the economy was growing at a snailʹs pace.
The Fedʹs rate cuts will__________bank reserves and __________.

• A) decrease; decrease the money supply and real GDP
• B) decrease bank reserves; decrease the exchange rate and real GDP
• C) increase; increase the exchange rate and real GDP
• D) increase; increase the money supply and real GDP

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Definitions:

Capital Account

An account showing the net changes in property ownership and transfer of payment among countries for international transactions, or in a company's context, represents the stake of owners in the firm.

Revenue Accounts

Accounts that record the income generated from the sale of goods and services, before any expenses are subtracted.

Income Summary

A temporary account used in the closing process that summarizes a company's revenues and expenses for the accounting period.

Revenue Account(s)

Accounts that track the income generated from the sale of goods or provision of services before any expenses are deducted.