If the Federal Reserve Wanted to Expand the Supply of Money

question 126

Multiple Choice

If the Federal Reserve wanted to expand the supply of money to head off a recession,it could

• A)decrease the reserve requirements.
• B)lower taxes.
• C)sell U.S.securities in the open market.
• D)increase the discount rate.

---

Definitions:

Variable Costs

Costs that vary directly with the level of production or output, such as materials and labor.

Contribution Margin

The selling price per unit, minus the variable cost per unit, used to determine the profitability of products or services.

Fixed Costs

Business expenses that remain constant regardless of the level of goods or services produced.

Fixed Costs

Costs that do not change with the level of production or sales over a certain period, such as rent or salaries.