Historical Actions Indicate That the Fed's Primary Goal of Monetary

question 18

Multiple Choice

Historical actions indicate that the Fed's primary goal of monetary policy over the past 20 years has been to

• A)maintain high interest rates.
• B)keep employment rates low.
• C)limit the availability of consumer credit.
• D)prevent high rates of inflation.

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Definitions:

NPV

Net Present Value; the calculation of the present value of cash inflows minus the present value of cash outflows over a period.

Cash Flows

The movement of money into and out of a business, representing its operating, investing, and financing activities.

WACC

Weighted Average Cost of Capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is proportionately weighted, including debt, equity, and any other long-term debt.

Reinvestment

The process of using dividends, interest, or any other form of income generated by an investment to purchase additional shares or units of that investment.