The Fed's Policy Actions of Reacting to Higher Inflation by Raising

question 20

Multiple Choice

The Fed's policy actions of reacting to higher inflation by raising the real interest rate during 2004-2006 were

• A)upward movements along the monetary policy curve.
• B)downward movement along the monetary policy curve.
• C)upward shifts of the monetary policy curve.
• D)downward shifts of the monetary policy curve.

---

Definitions:

Short-term Finance

Financing obtained for a time period of less than one year, often used to address immediate operational needs.

Commercial Paper

An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable and inventories.

Shortage Costs

Shortage costs are the expenses incurred by a business when it does not have enough inventory or resources to meet demand, including lost sales and dissatisfied customers.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the business's operating cycle, whichever is longer.