Which of the Following Monetary Policies Reduces Aggregate Demand and Output

question 142

Multiple Choice

Which of the following monetary policies reduces aggregate demand and output?

• A)A cut in the federal funds rate
• B)An open market purchase of government securities
• C)An increase in the discount rate
• D)A cut in the required reserve ratio

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Definitions:

Issuing Securities

The process in which new securities are created and sold to investors, typically involving bonds, stocks, or other financial instruments.

Firm Commitment Underwriting

An arrangement where an underwriter guarantees to purchase all securities offered by an issuer and assumes the risk of selling them to the market.

Underwriter

An entity that assesses and accepts financial risk on behalf of clients, often seen in contexts such as insurance and initial public offerings.

Financial Responsibility

The obligation to manage financial resources prudently, including paying debts and making informed financial decisions.