When the Fed Makes an Open-Market Sale, It

question 61

Multiple Choice

When the Fed makes an open-market sale, it:

• A) increases the money multiplier (m).
• B) increases the currency-deposit ratio (cr).
• C) increases the monetary base (B).
• D) decreases the monetary base (B).

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Definitions:

FUTA

The Federal Unemployment Tax Act, which imposes a payroll tax on businesses to fund state workforce agencies.

Federal Unemployment Tax

A tax imposed on employers to fund state workforce agencies. Employers pay this tax to finance unemployment compensation benefits for out-of-work employees.

Income Tax Payable

The amount of income tax that a company or individual owes to the government but has not yet paid.

Income Tax Expense

The cost incurred by businesses and individuals due to earnings taxed by federal, state, and local governments.