Which of the Following Would Cause the Money Supply in the United

question 3

Multiple Choice

Which of the following would cause the money supply in the United States to decrease?

• A) An increase in reserve requirements.
• B) A decrease in the discount rate.
• C) A purchase of bonds by the Federal Reserve.
• D) An increase in the world supply of gold.

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Definitions:

Common Stock

A type of equity security that represents ownership in a corporation, entitling the holder to vote on corporate matters and receive dividends.

Dividends in Arrears

Unpaid dividends on cumulative preferred stock, which must be paid out before any dividends can be issued to common stockholders.

Cumulative Preferred Stock

A type of preferred stock where missed dividend payments are accumulated and must be paid before any dividends can be issued on other stock classes.

Liability

A financial obligation or debt owed by a company to another entity, to be settled through the transfer of assets or services.