The Fact That, for Most of Its History, the Fed

question 64

Multiple Choice

 The fact that, for most of its history, the Fed was reluctant to make discount loans actually: ?

• A) at times was a destabilizing force for financial markets.?
• B) proved to be a very stabilizing force for financial markets.?
• C) pushed the discount rate above the target federal funds rate.?
• D) resulted in banks in very strong financial shape as being the only ones borrowing from the Fed.

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Definitions:

Capital Rationing

The process of selecting the most profitable projects to invest in when a company has a limited amount of capital.

Capital Outlay

Expenditures for acquiring fixed assets or adding to the value of an existing fixed asset with a useful life extending beyond the taxable year.

Cash Inflows

The total amount of money coming into a company from its operational, investing, and financial activities over a period.

Payback Period

The duration needed to recover the cost of an investment or project, typically expressed in years or months.