Exhibit 15-4 -If the Fed Is Targeting the Money Supply and the Supply

question 23

Multiple Choice

Exhibit 15-4
-If the Fed is targeting the money supply and the money demand shifts from D_m to D_m' in Exhibit 15-4,the Fed will

• A) do nothing and the interest rate will rise to i'
• B) do nothing and the interest rate will settle at i
• C) decrease the money supply to restore its target of i
• D) increase the money supply to restore its target of i
• E) decrease money demand back to D_m to restore its target of i

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Definitions:

Possible Errors

Mistakes or inaccuracies that might occur in the recording or reporting of financial transactions.

Bank Reconciliation

The process of matching and comparing figures from the accounting records against those shown on a bank statement to ensure they are in agreement.

Cash Balance

The amount of cash that a company, individual, or account has available at any given point in time.

Pre-numbered Documents

Documents that are sequentially numbered ahead of time to help ensure completeness and control over processes like inventory, purchasing, and payroll.