Figure 11-4

question 32

Multiple Choice

Figure 11-4
-Refer to Figure 11-4. Which of the following actions by the Fed could have caused the movement from AD₁ to AD₂ in Panel (a) ?

• A) selling government bonds in the open market
• B) buying government bonds in the open market
• C) increasing the discount rate
• D) increasing the federal funds rate

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Definitions:

Gross Margin Percentage

A financial metric that represents the gross margin as a percentage of total sales revenue, indicating the efficiency of a company in producing and selling goods.

Price-Earnings Ratio

A valuation metric for stocks, calculated by dividing the market price of a stock by its earnings per share, indicating the dollar amount an investor can expect to invest in a company to receive one dollar of that company’s earnings.

Common Stock

Equity ownership in a corporation, with shareholders entitled to vote on corporate matters and receive dividends when declared.

Market Price

The present cost at which a product or service can be purchased or sold on the market.