Which of the Following Actions by the Fed Would Cause

question 77

Multiple Choice

Which of the following actions by the Fed would cause the money supply to increase?

• A) Purchases of government bonds from banks.
• B) An increase in the reserve requirement.
• C) An increase in the discount rate.
• D) Sales of government bonds to the public.

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Definitions:

Explicit Costs

These are the direct, out-of-pocket payments made by businesses for operational expenses like wages, rent, and materials.

Monetary Outlay

The amount of money spent on a particular transaction or investment.

Implicit Costs

The opportunity costs that arise when a company uses internal resources without a direct payment.

Explicit Costs

Direct payment made to others in the course of running a business, such as wages, rent, and materials.