If the Fed Wants to Reduce the Money Supply

question 139

Multiple Choice

If the Fed wants to reduce the money supply,

• A) it increases the discount rate.
• B) it decreases the discount rate.
• C) both A and B
• D) none of the above

---

Definitions:

Foreign Currency Transactions

Foreign currency transactions involve the exchange of one country's currency for another, affecting companies that engage in international trade or investment.

Monetary Assets

Assets that hold a fixed monetary value, including cash and assets that can be easily converted into cash.

Current Rate

The present interest rate, exchange rate, or other financially relevant rate that is applicable to a financial instrument or transaction.

Goodwill Impairment

The financial recognition that the value of the goodwill acquired in a business combination has decreased, indicating that the carrying value of the goodwill is no longer supported by the future economic benefits it was expected to generate.