Which One of the Following Actions Taken by the Central

question 99

Multiple Choice

Which one of the following actions taken by the central bank would NOT reduce the country's money supply?

• A) Raise the discount rate.
• B) Raise the reserve requirement.
• C) Buy bonds on the open market.
• D) Raise the interest rate that the Federal Reserve pays banks on their deposits at the Fed.

---

Definitions:

Noncumulative

Pertaining to dividends, a feature allowing a company not to pay dividends in arrears to its shareholders.

Treasury Stock

Equities that were once sold to investors and later re-purchased by the entity that issued them, effectively reducing the quantity of stocks traded publicly.

Par Value

Par value is a nominal value assigned to a security, such as a stock or bond, at issuance, often used to determine legal capital or accounting value rather than market value.

Stock Dividend

A payment to shareholders in the form of additional shares of stock rather than cash.