If the Federal Reserve Wished to Engage in Expansionary Monetary

question 71

Multiple Choice

If the Federal Reserve wished to engage in expansionary monetary policy it could

• A)raise the primary credit rate.
• B)sell government debt.
• C)lower the reserve ratio.
• D)raise the Federal Funds rate target.

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Definitions:

Capacity

The maximum amount that something can contain or produce.

Variable Costs

Costs that change in proportion to the amount of goods produced or the volume of sales, like labor and materials.

Contribution Margin Ratio

The ratio that represents what percentage of sales contributes to the covering of fixed costs, calculated by subtracting variable costs from sales revenue and dividing the result by sales revenue.

Operating Income

Earnings from a company's core business operations, excluding revenue and expenses from non-operating activities like investments.