Recall Application 1, "Avoiding a Liquidity Trap," to Answer the Following

question 115

Multiple Choice

Recall Application 1, "Avoiding a Liquidity Trap," to answer the following questions:
-Which of the following most likely caused the low short- term interest rates in 2008?

• A) The recession caused by the financial crisis forced the Fed to raise the interest rates.
• B) The inflation caused by the financial crisis forced the Fed to raise the interest rates.
• C) The recession caused by the financial crisis forced the Fed to lower the interest rates.
• D) The inflation caused by the financial crisis forced the Fed to lower the interest rates.

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Definitions:

Cost of Goods Sold

The direct financial outlays for making the goods a company offers for sale, including the cost of materials and labor.

Supplies Account

An account used to track the costs of supplies that have not been consumed by the end of an accounting period.

Operating Expenses

Costs associated with the day-to-day operations of a business, such as rent, utilities, and payroll.

Operating Income

The profitability from a company's core business operations, excluding deductions of interest and taxes.