If Inflation Is a Threat, Then the Fed Will Be

question 36

Multiple Choice

If inflation is a threat, then the Fed will be expected to engage in

• A) expansionary monetary policy.
• B) contractionary monetary policy.
• C) policies to increase the money supply.
• D) policies to lower the rate of interest.

---

Definitions:

Accrued Liabilities

Obligations that a company has incurred during a specified accounting period but has not yet paid out, often appearing as current liabilities on the balance sheet.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value over time.

Indirect Method

A technique used in cash flow statement preparation that adjusts net income for changes in balance sheet accounts to calculate operating cash flow.

Operating Activities

Cash flow actions related to the day-to-day operations of a business, such as receiving cash from customers and paying suppliers.