When the Federal Reserve Increases Excess Reserves to Reduce Interest

question 244

Multiple Choice

When the Federal Reserve increases excess reserves to reduce interest rates and stimulate spending, it is said to engage in:

• A) tight money policy.
• B) expansionary fiscal policy.
• C) expansionary monetary policy.
• D) restrictive policy.

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Definitions:

Advantage

The condition of being in a favorable or superior position relative to competitors or alternatives.

Treasury Stock

Shares initially part of the company's outstanding shares that have been repurchased by the company.

Par Value

Par value is the nominal or face value of a bond, share of stock, or a coupon as stated by the issuer.

Stated Value

A per-share amount set by the board of directors for no-par value stock, which is not determined by market forces.