In Addition to Lowering the Discount Rate to Increase the Money

question 113

Multiple Choice

In addition to lowering the discount rate to increase the money supply, the Fed could also

• A) purchase bonds on the open market and raise reserve requirements.
• B) sell bonds on the open market and raise reserve requirements.
• C) purchase bonds on the open market and lower reserve requirements.
• D) sell bonds on the open market and lower reserve requirements.

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Definitions:

Product Cost Concept

A concept used in applying the cost-plus approach to product pricing in which only the costs of manufacturing the product, termed the product cost, are included in the cost amount to which the markup is added.

Manufacturing Costs

Manufacturing costs encompass all expenses directly involved in the production of goods, including materials, labor, and overhead.

Markup

The difference between the cost of a product and its selling price, expressed as a percentage over cost.

Fixed Expenses

Regular and unchanged expenses incurred by a business irrespective of its level of output or sales volume, such as lease payments, insurance, and salaries of permanent employees.