If the Fed Wants to Increase the Quantity of Money

question 124

Multiple Choice

If the Fed wants to increase the quantity of money, it can

• A) lower income tax rates.
• B) purchase U.S. government securities.
• C) increase the government budget deficit.
• D) raise the exchange rate.

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Definitions:

Alcohol Tax

A special tax imposed on alcoholic beverages to generate revenue and/or discourage excessive consumption owing to health or social reasons.

Compliance Costs

Expenses incurred by businesses or individuals to adhere to laws, regulations, and standards.

U.S. Income Tax

A tax imposed by the U.S. government on the income earned by individuals, corporations, estates, and other entities.

Vertical Equity

The principle that people with higher incomes should pay more in taxes than those with lower incomes, reflecting a progressive tax system.