If the Reserve Bank Is Worried About Inflation and Wants

question 90

Multiple Choice

If the Reserve Bank is worried about inflation and wants to raise the interest rate, in the short run it can

• A) increase the quantity of money.
• B) decrease the demand for money.
• C) decrease the quantity of money.
• D) increase the demand for money.
• E) directly raise the interest rate without affecting either the demand for money or the supply of money.

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Definitions:

Loss

A financial term referring to when expenses exceed revenues in a specific period, indicating a negative profitability.

Net Cash

The amount of cash available after accounting for cash inflows and outflows. It represents a company's liquid assets.

Financing Activities

Financing Activities involve transactions between a company and its investors or creditors that affect the equity and debt of the business, including issuing stock, paying dividends, and borrowing money.

Common Stock

equity securities that represent ownership in a corporation, providing voting rights and entitling the holder to a share of the company's success through dividends and/or capital appreciation.