One Criticism of the Fed's Policy of Forward Guidance During

question 14

Multiple Choice

One criticism of the Fed's policy of forward guidance during the recession of 2007-2009 is that it contributed to a prolonged period of abnormally low interest rates,leading to speculative bubbles in stocks or other financial assets as investors

• A)chose to sell off these assets due to the low returns on investment.
• B)borrowed at these low interest rates to buy these assets.
• C)delayed purchasing these assets until interest rates rose.
• D)switched from investing in these assets to assets with higher risks.

---

Definitions:

Depreciation Expense

is the charged amount for a particular period for the reduction in value of tangible assets due to usage and passage of time.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset since it was put into use, representing the wear and tear on the asset over time.

Balance Sheet Credit

Refers to any credit entry recorded in the balance sheet, indicating an increase in liabilities or equity or a decrease in assets.

Adjusted Trial Balance

A trial balance prepared after adjusting entries are made and posted, used to verify the equality of debits and credits.