In the Context of Monetary Policy, Which of the Following

question 62

Multiple Choice

In the context of monetary policy, which of the following statements is true of the discount rate?

• A)The Fed increases it during recessions.
• B)When the cost of acquiring funds from the Fed is low, interest rates on bank loans tend to fall.
• C)When the Fed increases it, banks can obtain funds at a lower cost.
• D)It is the interest rate that the Fed charges on its loans to individuals.

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Definitions:

Accrual

An accounting method where revenue and expenses are recorded when they are earned or incurred, regardless of when the cash is received or paid.

Crediting Wages Payable

The accounting action of acknowledging that a company owes wages to its employees, which decreases the wages payable account.

Debiting Interest Receivable

The process of recording the amount of interest earned but not yet received in cash as an asset in the accounting records.

Increase Liabilities

The process or action that results in a higher amount of obligations or debts owed by an entity to others.