If the Fed Is Increasing Its Holdings of Government Bonds

question 156

Multiple Choice

If the Fed is increasing its holdings of government bonds at the same time the federal deficit is increasing,

• A)the Fed and the Treasury are, as usual, coordinating activities.
• B)crowding out is more likely to occur.
• C)the debt is being monetized.
• D)the Fed is attempting to increase interest rates.

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Definitions:

Married Person

A tax filing status for individuals who are legally married, affecting tax brackets, allowances, and potential deductions.

Tax Liability

The total amount of tax owed to a taxing authority, such as the IRS, based on taxable income and tax rate.

Personal and Dependency

Terms related to exemptions that can be claimed on tax returns for oneself and for dependents, affecting taxable income.

Exemption

Deductions allowed by law to reduce taxable income based on the taxpayer and dependents.