Which of the Following Represents an Action by the Federal

question 186

Multiple Choice

Which of the following represents an action by the Federal Reserve that is designed to increase the money supply?

• A) a decrease in the required reserve ratio
• B) selling government bonds in the open market
• C) an increase in the discount rate
• D) a decrease in federal tax rates

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Definitions:

Geometric Average Return

is a method of calculating the average rate of return on an investment that accounts for the effects of compounding, typically lower than the arithmetic average return.

Arithmetic Average Return

The simple mean of a series of returns generated over a period of time.

Dollar-Weighted Return

A method of calculating an investment's return that accounts for the timing and amount of cash flows into the investment.

Arithmetic Average

The simple mean calculated by adding a set of values and then dividing by the number of values.