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:

Diversification

A risk management strategy that mixes a wide variety of investments within a portfolio.

Insurance

A financial product sold by insurance companies to safeguard against the risk of financial losses, both big and small.

Reducing Risk

Strategies and actions taken to minimize potential losses or the likelihood of undesirable outcomes in investment, operational, and financial activities.

Demand Curve

A visual chart that illustrates the connection between a product's price and the amount of it consumers want to buy.