If the Fed Believes There Has Been a Positive Wealth

question 167

Multiple Choice

If the Fed believes there has been a positive wealth effect, it will want to

• A)raise interest rates to reduce inflationary pressure.
• B)raise interest rates to reduce prices.
• C)lower interest rates to increase potential GDP.
• D)lower interest rates to offset the increase in wealth.
• E)raise interest rates to encourage saving and investment.

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Definitions:

Adjusting Entries

Bookkeeping entries recorded at the close of a fiscal period to assign earnings and outlays to the timeframe in which they happened.

Adjusting Entries

Accounting records created during a period's close to distribute revenues and expenses to their rightful temporal occurrences.

Cash

Money in the form of currency that can include bank notes and coins, available for transactions or savings.

Income Summary

The Income Summary is an account where revenues and expenses are compiled to show the net result of a company's operations for a particular period.