Which of the Following Combinations of Fed Actions Would Be

question 33

Multiple Choice

Which of the following combinations of Fed actions would be most effective in "mopping up" reserves away from the banking system?

• A)reducing the interest paid on excess reserves and also doing "repos" with banks and nonbanks
• B)raising the interest paid on excess reserves and also doing "repos" with banks and nonbanks
• C)reducing the interest paid on excess reserves and also doing "reverse repos" with banks and nonbanks
• D)raising the interest paid on excess reserves and also doing "reverse repos" with banks and nonbanks

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations by comparing its current assets to its current liabilities.

Note Payable

A written promise to pay a specified amount of money, usually with interest, at a future date.

Account Payable

An account payable is a liability representing an amount owed by an entity to a supplier or creditor for goods or services received but not yet paid for.

Return on Assets Ratio

The Return on Assets Ratio measures a company's ability to generate earnings from its assets, calculated by dividing net income by the average total assets.