Which One of the Following Policies Might the Fed Initiate

question 93

Multiple Choice

Which one of the following policies might the Fed initiate if it wanted to increase the money supply?

• A)Sell government securities
• B)Increase the reserve requirement
• C)Increase the discount rate
• D)Decrease the reserve requirement

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Definitions:

Optimal Initial Cash Balance

Optimal initial cash balance is the ideal amount of cash a business should hold at the start of a period to meet operational needs and minimize costs, considering factors like transaction costs and opportunity costs.

Monthly Standard Deviation

A statistical measure that represents the variability or volatility of an asset's returns over a month.

Market Rate of Return

The average rate of return anticipated by investors in the overall market for a particular investment category.

Collection Float

The time period between when a check is deposited and when it is cleared and the funds are available.