Which of the Following Describes What the Fed Would Do

question 153

Multiple Choice

Which of the following describes what the Fed would do to pursue an expansionary monetary policy?

• A)use open market operations to buy Treasury bills
• B)use open market operations to sell Treasury bills
• C)use discount policy to raise the discount rate
• D)raise the reserve requirement

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Definitions:

Financial Risk

The possibility of losing money on an investment or business venture, including the risk of losing some or all of the original investment.

Financial Leverage

The use of borrowed funds to increase the potential return of an investment, amplifying both potential gains and losses.

Net Income

The total earnings of a company after subtracting all expenses from revenue, including taxes and interest.

Debt Financing

A method of raising capital through the sale of bonds, bills, or notes to individual and/or institutional investors, in return for lending the company money.