The Federal Reserve's Major Tools to Control the Money Supply

question 107

Multiple Choice

The Federal Reserve's major tools to control the money supply are I. open market operations. II. discount rate lending and the term auction facility. III. required reserve ratio and payment of interest on reserves. IV. federal funds lending.

• A) I and II only
• B) III and IV only
• C) I, II, and III only
• D) I, II, III, and IV

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Definitions:

Financing Activities

Transactions that involve changes in the size and composition of the equity capital or borrowings of a company.

Indirect Method

A technique for preparing the cash flow statement, where net income is adjusted for changes in balance sheet accounts to calculate cash flow from operating activities.

Financial Statements

Compiled reports that convey the financial performance and position of a company, including the balance sheet, income statement, and cash flow statement.

Net Cash Flow

The difference between a company's total cash inflows and outflows during a specific period.