Which of the Following Is an Example of an Expansionary

question 78

Multiple Choice

Which of the following is an example of an expansionary monetary policy?

• A)A reduction in government purchases of goods and services
• B)An increase in the discount rate
• C)An open market sale of U.S.government securities
• D)A reduction in the required reserve ratio
• E)A tax cut

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Definitions:

Constant-growth Dividend-discount Model

A method for valuing a stock by assuming that dividends grow at a constant rate indefinitely, used to estimate the stock's price based on future dividend payments.

Multifactor CAPM

Generalization of the basic CAPM that accounts for extra-market hedging demands.

APT

The Arbitrage Pricing Theory, a multifactor model used to determine asset returns based on the relationship between a financial asset's expected return and its risks.

Hedge Portfolios

Investment portfolios designed to reduce the risk of adverse price movements in an asset, often by using derivatives such as options and futures.