If the Fed Wanted to Institute a More Expansionary Monetary

question 190

Multiple Choice

If the Fed wanted to institute a more expansionary monetary policy, which of the following would it be most likely to do?

• A) reduce taxes
• B) increase government expenditures
• C) buy government bonds from the public
• D) raise the discount rate

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Definitions:

Passive Management

Buying a diversified portfolio, often a broad-based market index, without attempting to identify mispriced securities.

Index Fund

A mutual fund holding shares in proportion to their representation in a market index such as the S&P 500.

Investment Club

A group of individuals who pool their money to make investments, often operating under a democratic structure to make decisions.

EMH

The Efficient Market Hypothesis, a theory that suggests all known information is already reflected in stock prices, and therefore, beating the market consistently through stock selection or market timing is unlikely.