If the Federal Reserve Wants to Increase the Availability of Money

question 44

Multiple Choice

If the Federal Reserve wants to increase the availability of money and credit, it can

• A) lower the discount rate.
• B) raise the reserve requirements.
• C) sell government bonds to the public.
• D) encourage banks to increase their prime lending rate.

---

Definitions:

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return.

Annuity Due

A type of annuity payment where payments are made at the beginning of each period, instead of at the end, which is common in standard annuities.

Ordinary Annuity

A series of equal payments made at equal intervals over a period of time, with the first payment occurring at the end of the period.

Present Value

The existing value of a future sum or cash flow sequence, assessed with a certain rate of return.