Which of the Following Was Not a Reason That the Federal

question 209

Multiple Choice

Which of the following was not a reason that the Federal Reserve took on additional risks associated with unconventional policy during the recession of 2007-2009?

• A)The large budget deficit constrained fiscal policy.
• B)The inflated price of Treasury bills made them too expensive to purchase in open market operations.
• C)Only the Federal Reserve acting as the central bank can serve as the lender of last resort.
• D)The Fed was able to act more quickly than Congress.

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Definitions:

Cash Flow

The total amount of money being transferred into and out of a business, especially as affecting liquidity.

Liquidity Ratios

Financial ratios that measure a company's ability to meet its short-term obligations, such as current ratio and quick ratio.

Activity Ratios

Financial metrics used to measure a company's ability to convert different accounts within its balance sheets into cash or sales.

Activity Ratios

Metrics that assess the efficiency with which a company utilizes its assets to generate revenue or sales.