The Fed Can ____ the Level of Spending as a Means

question 2

Multiple Choice

The Fed can ____ the level of spending as a means of stimulating the economy by ____ the money supply.

• A)increase; decreasing
• B)decrease; increasing
• C)decrease; decreasing
• D)increase; increasing

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Definitions:

Pre-Tax Cost of Debt

The rate of return that a company pays on its debt before taking into account taxes.

Weighted Average Cost of Capital (WACC)

The average rate of return a company is expected to pay its security holders to finance its assets, weighted by the proportion of equity and debt in the company's capital structure.

Coupon Rate

The rate of interest a bond pays annually, expressed as a percentage of its nominal value.

Dividend Growth Rate

The annualized percentage rate of growth of a company’s dividend payout, indicating the stability and growth prospects of the company to investors.