When the Fed Lowers the Federal Funds Rate

question 87

Multiple Choice

When the Fed lowers the Federal Funds rate:

• A) both interest rates and the money supply increase.
• B) interest rates decrease but the money supply increases.
• C) interest rates increase but the money supply decreases.
• D) both interest rates and the money supply decrease.

---

Definitions:

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit columns to ensure a company's bookkeeping system is mathematically correct.

Balance Sheet

A financial record that outlines the value of a company's assets, its liabilities, and the equity belonging to investors, at a particular time.

Financial Statement Items

These are line items or components found in financial statements like the balance sheet, income statement, and cash flow statement, representing financial performance and position.

Decreases

Represents a decline in quantity, value, or quality of an asset, revenue, or any other financial element.