Which Combination of Signals Is Indicative That Fed Policy Is

question 4

Multiple Choice

Which combination of signals is indicative that Fed policy is restrictive and that a shift to a more expansionary policy is in order?

• A)Commodity prices are falling,and the dollar is appreciating.
• B)The unemployment rate is low and the inflation rate is high.
• C)Commodity prices are rising,and the dollar is depreciating.
• D)The index of leading indicators is rising and the unemployment rate is low.

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Definitions:

Statement of Cash Flows

A financial report detailing the impact of alterations in balance sheet figures and income on cash and cash equivalents, dividing the cash flows into categories of operating, investing, and financing activities.

Operating Activities

Transactions and events associated with the primary operations of a business, such as sales and service provision, reflected in its cash flow.

Indirect Method

A way of preparing the cash flow statement where net income is adjusted for changes in balance sheet accounts to calculate the cash from operating activities.

Statement of Cash Flows

A financial report that depicts how variations in income and balance sheet accounts affect the cash and cash equivalents, organized into the segments of operating activities, investing activities, and financing activities.