If the Unemployment Rate Is 10% and the Inflation Rate

question 54

Multiple Choice

If the unemployment rate is 10% and the inflation rate is 2%, the Federal Reserve will most likely:

• A) raise the discount rate.
• B) buy bonds.
• C) lower the reserve requirement.
• D) sell bonds.

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Definitions:

Journal Entry

A journal entry is a record of a financial transaction in the accounting records, showing the accounts and amounts to be debited and credited.

Discount on Bonds Payable

The difference between the face value of a bond and the price for which it sells when the bond's market value is lower than its face value.

Installment Note

A debt instrument that requires regular payments, or installments, of principal and interest over a set period, until the debt is fully repaid.

Journal Entry

A record in accounting that shows a business transaction and its effect on the accounts, typically involving a debit and credit.