The Best Way for Federal Reserve Board Officials to Help

question 51

Multiple Choice

The best way for Federal Reserve Board officials to help boost a stagnant economy is to

• A)raise interest rates so that banks can earn more money on the loans they provide to individuals and businesses.
• B)lower interest rates so that banks can provide more loans at cheaper rates to individuals and businesses.
• C)take money out of circulation so that the dollar becomes more valuable.
• D)raise the reserve requirement, restricting the amount of cash and negotiable securities that banks must have on hand.

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Definitions:

Reduction of the Principal

The process of decreasing the initial amount of money borrowed or invested over time.

10th Payment

The tenth installment of a series of payments in a loan or mortgage.

Compounded Semi-Annually

Interest on an amount that is calculated twice a year and added to the principal for future interest calculations.

Amortized

The process of paying off debt through regular payments over a set period, where the payments cover both principal and interest.