Conducting Monetary Policy So That FF Rate =

question 5

Multiple Choice

Conducting monetary policy so that FF rate = .05 where FF rate is the nominal federal funds interest rate, is an example of :

• A)an active policy rule.
• B)a passive policy rule.
• C)discretionary policy.
• D)an automatic stabilizer.

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Definitions:

Allowances for Doubtful Accounts

A contra-asset account that reduces the total amount of accounts receivable to reflect the portion that is estimated not to be collected.

Net Realizable Value

The estimated selling price in the ordinary course of business, minus the estimated costs of completion and the costs necessary to make the sale.

Bad Debt Expense

A provision for accounts receivable that are considered unlikely to be collected.

Percentage of Credit Sales

An accounting method used to estimate bad debts expense by applying a fixed percentage to the total credit sales of a period.