An Example of a Federal Reserve Action That Increases the Money

question 157

Multiple Choice

An example of a Federal Reserve action that increases the money supply is:

• A) an increase in the required reserve ratio.
• B) a decrease in the discount rate.
• C) a law placing a ceiling on the maximum interest rate that banks can pay to depositors.
• D) the Fed selling bonds in the open market.

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Definitions:

Total Taxes

The cumulative amount of taxes paid by individuals or companies to the government, including federal, state, and local taxes.

Marginal Tax Rates

The rate at which the last dollar of income is taxed, indicating the percentage of tax applied to your income for each tax bracket in which you qualify.

Average Tax Rates

The ratio of the total amount of taxes paid to the total income, showing the fraction of income paid in taxes.

Regressive Tax

A tax imposed in such a manner that the tax rate decreases as the amount subject to taxation increases, disproportionately affecting those with lower incomes.