If the Fed Decides to Buy T-Bills, It Increases the Demand

question 82

Multiple Choice

If the Fed decides to buy T-bills, it increases the demand for T-bills.How will this affect the price of T-bills and the interest rate?

• A)T-bill prices fall and interest rates fall.
• B)T-bill prices rise and interest rates rise.
• C)T-bill prices rise and interest rates fall.
• D)T-bill prices fall and interest rates rise.

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Definitions:

Direct Write Off Method

An accounting practice where uncollectable accounts receivable are directly removed from the books when deemed uncollectible.

Direct Write-off Method

An accounting practice where uncollectible accounts receivable are directly written off against income at the time they are deemed unrecoverable.

General Journal

The general journal is an accounting ledger in which all types of transactions are initially recorded before they are posted to specific accounts in the general ledger.

Direct Write Off Method

An accounting method where uncollectible accounts receivable are written off directly against income at the time they are deemed uncollectible.