Which of the Following Policies Could the Fed Use to Lower

question 26

Multiple Choice

Which of the following policies could the Fed use to lower the interest rate?

• A) a tax cut
• B) selling government securities
• C) raising the discount rate
• D) reducing the required reserve ratio

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Definitions:

Millions

A numeric unit indicating one thousand thousand (1,000,000) of any quantity.

Net Working Capital

The difference between a company’s current assets and its current liabilities, indicating short-term financial health.

Taxable Income

The amount of income subject to tax, after all deductions and exemptions are taken into account.

Net Capital Spending

The total spending on fixed assets less the proceeds from the sale of fixed assets, indicating a company's investment in physical assets.