Which of the Following Describes How the Federal Reserve Could

question 34

Multiple Choice

Which of the following describes how the Federal Reserve could use the tools of monetary policy to increase the money supply?

• A) Reduce the reserve requirement, reduce the discount rate, or buy bonds.
• B) Raise the interest rate banks receive from the Fed, increase the discount rate, or sell bonds.
• C) Increase the reserve requirement, increase the discount rate, or sell bonds.
• D) Increase the reserve requirement, reduce the discount rate, or reduce the interest rate that banks receive from the Fed.

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Definitions:

Par Value

A nominal or face value assigned to a share of stock, often used in accounting to represent the minimum price at which shares can be issued.

Common Stock

Represents ownership shares in a corporation, giving holders voting rights and a dividend potential.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, representing how much of an asset's value has been used up.

Tangible Asset

Physical assets that can be seen and touched, such as buildings, machinery, and inventory.